COURT FILE NO.: CV-21-86410 DATE: 2023/01/26 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: OTTAWA RENTAL AND SUPPLY LTD., Plaintiff (Moving Party) -and- 12050021 CANADA INC. ET AL., Defendants (Responding Parties)
BEFORE: Madam Justice S. Corthorn
COUNSEL: Tegan V. Stairs, for the Plaintiff Corporation No one appearing for the Defendants
HEARD: Motion in Writing
Endorsement
Introduction
[1] The plaintiff corporation commenced an action against the defendants for breach of contract. The plaintiff corporation operates a business in renting and selling construction equipment. The defendant corporation carries on a landscaping, excavation, and property maintenance business. The individual defendants are the principals of the defendant corporation.
[2] The plaintiff corporation entered into a credit agreement with the defendant corporation for the supply of construction equipment and materials. The individual defendants executed personal guarantees with respect to the credit agreement.
[3] From November 2020 to March 2021, the defendant corporation failed to pay invoices delivered by the plaintiff corporation pursuant to the credit agreement. In the statement of claim, it is alleged that, as of March 24, 2021, the total amount outstanding was $52,061.03.
[4] In October 2021, the parties resolved the action and entered into minutes of settlement. In summary, the minutes of settlement,
a) identify the total amount outstanding of $52,061.03;
b) require the defendants to pay $750.00 per week commencing on October 22, 2021;
c) provide that in the event of a default in payment, which is not cured within seven days of the date of default, the plaintiff corporation is entitled to proceed, without notice to the defendants, with a motion for judgment;
d) include a draft judgment at Schedule ‘A’; and
e) identify that, in the event of a default in payment, the parties consent to judgment on the terms set out in Schedule ‘A’.
[5] The draft judgment, at Schedule ‘A’ requires the defendants to pay $52,061.03 to the plaintiff corporation. In addition, the pre-judgment interest rate is set at 12 per cent per year and the post-judgment interest rate at 24 per cent per year. Last, the draft judgment provides that the defendants will pay the plaintiff corporation costs in the total amount of $2,000.00 (i.e., for fees, disbursements, and HST).
[6] The plaintiff corporation alleges that the defendant corporation (a) defaulted in its weekly payment in June 2022, and (b) has not made any weekly payments since the date of the first default. The plaintiff corporation alleges that the principal amount outstanding as of the date of the first default is $29,311.03.
[7] The plaintiff corporation brings this motion without notice to the defendants. The plaintiff corporation relies on the terms of the minutes of settlement as entitling it to bring the motion without notice to the defendants.
[8] The plaintiff corporation seeks a judgment for (a) the principal sum of $27,311.03, (b) pre-judgment interest at the rate of 12 per cent per year, (c) post-judgment interest at the rate of 24 per cent per year, and (d) costs of $2,000.
[9] The motion record is dated November 8, 2022. The matter came before me in writing on January 10, 2023.
Discussion
[10] There are a number of reasons why the motion is adjourned. The court would have no difficulty (a) granting judgment for the principal amount outstanding of $27,311.03, and (b) including in the judgment a term requiring the defendants to pay the plaintiff corporation its costs of the action in the amount of $2,000, all-inclusive.
[11] Without additional evidence and case or other authorities, the court is, however, unable to determine the claims for pre-judgment interest at 12 per cent per year and post-judgment interest at 24 per cent per year.
[12] It is neither efficient nor cost-effective for the relief requested to be granted in stages. In addition, as will be seen from the reasons below, the plaintiff corporation may require an order dispensing with the requirement to serve the motion record on the defendants.
[13] I will deal first with pre-judgment interest and then post-judgment interest.
Pre-judgment Interest
[14] The only evidence with respect to how pre-judgment interest is to be calculated is item 2 of the draft judgment included with the minutes of settlement. Item 2 provides that “the sum of $52,061.03 bears pre-judgment interest at the rate of 12% per annum from April 19, 2021.” The court would not typically address pre-judgment interest in that manner in a judgment.
[15] The court typically receives evidence as to (a) the basis for the rate upon which pre-judgment interest is to be calculated, and (b) the amount of pre-judgment interest owing as of the date of the motion. The evidence would be presented in such a way as to permit the court to calculate pre-judgment interest owing as of the date on which judgment is granted. That evidence is frequently in the form of a statement as to the per diem rate at which pre-judgment interest continues to accrue between the date of the affidavit (in which that evidence is set out) and the date on which judgment is granted.
[16] The term “pre-judgment interest rate” is defined in s. 127(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”). The term is therein defined as, “the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced, rounded to the nearest tenth of a per centage point”.
[17] The statement of claim in this action was issued in April 2021. Pursuant to the CJA, the prescribed pre-judgment interest rate is two (2) per cent per year.
[18] The court has the discretion, under s. 130(1)(b) of the CJA, to allow either pre-judgment or post-judgment interest at a rate higher or lower than the rate prescribed by the statute. Section 130(2)(a)-(g) sets out the factors to be considered by the court when asked by a party to exercise the court’s discretion under s. 130(1)(b).
[19] There are no allegations in the statement of claim which address why the plaintiff corporation is claiming or may be entitled to pre-judgment interest at the rate of 12 per cent per year. Nor is there any evidence on the point.
[20] The court understands that the parties entered into minutes of settlement which prescribe a pre-judgment interest rate of 12 per cent per year. That they did so is evidence of “the circumstances of the case”: s. 130(2)(b). There is no evidence addressing any of the other factors the court must consider when asked to exercise its discretion under s. 130(1).
[21] There is no evidence as to the date on which the plaintiff corporation is asking the court to find that pre-judgment interest began to accrue. The draft judgment identifies April 19, 2021 as the date on which pre-judgment interest began to accrue. Yet, the date of the first default in payment was not until June 17, 2022.
[22] In addition, there was a seven-day period in which the defendants were entitled to attempt to cure their default. That period ended on either June 24 or June 25, 2022 – depending on whether the seven-day period starts on the date of default or on the day following the date of default. Is that seven-day period to be considered when determining the date on which pre-judgment interest began to accrue?
[23] For the reasons set out above, the court is unable to determine either the pre-judgment interest rate or the amount of pre-judgment interest owing as of the date of the judgment.
Post-judgment Interest
[24] The term “post-judgment interest rate” is also a defined term. In s. 127(1) of the CJA, that term is defined as, “the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the date of the order falls, rounded to the next higher whole number where the bank rate includes a fraction, plus 1 per cent”.
[25] If judgment were granted in January 2023, the post-judgment interest would be based on the bank rate as of the end of the day on December 1, 2022, rounded to the next higher whole number, if necessary, plus an additional one per cent. There is no evidence before the court as to what that bank rate is.
[26] There are no allegations in the statement of claim which address why the plaintiff corporation is claiming or is entitled to post-judgment interest at the rate of 24 per cent per year. Nor is there any evidence on the point.
[27] The court understands that the parties entered into minutes of settlement which prescribe a post-judgment interest rate of 24 per cent per year. That they did so is evidence of “the circumstances of the case”: s. 130(2)(b). There is no evidence addressing any of the other factors the court must consider when asked to exercise its discretion under s. 130(1). Once again, the fact that the parties agreed to such a rate is only one of the relevant factors.
Proceeding Without Notice to the Defendants
[28] Clause 8 of the minutes of settlement provides as follows:
The Defendants consent to, and agree that, the Judgment shall be issued in the form attached as Schedule “A” without any requirement of notice to the Defendants, in the event that there is any default in payment that is not cured within 7 days after the date of the default, provided that proper notice is given in accordance with these Minutes of Settlement and Consent to Judgment.”
[29] The court assumes that the “proper notice” referred to in the above-quoted clause means that the defendants were given notice of default and of the plaintiff corporation’s intention to obtain and enforce a judgment. Clause 7 of the minutes of settlement addresses what is required for proper notice. Clause 7 provides that in the event of a default in payment, the plaintiff corporation “shall promptly provide the Defendants by email to melanie@tsn-groups.ca with written notice of its intention to obtain and enforce the Judgment”.
[30] The evidence is that, subsequent to the date of first default, a principal of the plaintiff corporation sent an email to melaniethibert@tsn-groups.ca, in an effort to inform the defendants of the plaintiff corporation’s intention to obtain and enforce judgment, unless the default in payment was cured within seven days of the date of notice. That evidence is from para. 7 of the supporting affidavit. The email address included in para. 7 of the supporting affidavit does not accord with the email address set out in clause 7 of the minutes of settlement. Absent any other evidence, the court would question whether the defendants were given proper notice of the initial default.
[31] A copy of the first email sent, following the date of the initial default, is, however, exhibit “B” to the supporting affidavit. The exhibit identifies that the email was sent to melanie@tsn-groups.ca. A second email, sent in October 2021, was also sent to that address. That address accords with the address set out in clause 7 of the minutes of settlement.
[32] Exhibit “B” includes only the message sent; it does not include any delivery receipt or read receipt documentation. It would be helpful, in circumstances of this kind, to include such receipts as evidence that the email was, at a minimum, delivered and perhaps even read.
[33] The judgment which the plaintiff corporation is seeking is not the same as that attached as Schedule ‘A’ to the minutes of settlement. The defendants did not consent to judgment on the terms now sought. The court understands that the differences between the judgment at Schedule ‘A’ to the minutes of settlement and the judgment now requested favour the defendants because (a) the principal amount claimed is less than the principal amount set out in Schedule ‘A’, and (b) the resultant pre-judgment interest is expected to be less than that to which the plaintiff corporation would be entitled based on Schedule ‘A’.
[34] The statement of claim was issued in April 2021. The time for service of the originating process and for a statement of defence to be delivered has long passed. If a statement of defence was delivered, a copy of it is not in the record. There is no evidence as to whether the defendants delivered a statement of defence or were noted in default.
[35] If the defendants were not noted in default, the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provide that the defendants are entitled to notice of the motion unless an order is made dispensing with the requirement for service. For the plaintiff corporation to proceed with its motion without notice to the defendants, the plaintiff corporation requires an order dispensing with the requirement for service of the motion record on the defendants. The plaintiff corporation does not request that relief in its motion, does not set out grounds in support of that relief, and does not, in the supporting affidavit, address this issue.
[36] The terms of the minutes of settlement may be some evidence upon which the plaintiff corporation relies in support of a request for an order dispensing with the requirement for service of the motion record on the defendants. Those terms are not, on their own, sufficient to support such relief being granted.
[37] The minutes of settlement were signed by the parties and not by counsel. At para. 3 of the supporting affidavit, the affiant states that the parties were represented by counsel when negotiating the terms of the minutes of settlement. If the plaintiff corporation intends to serve the defendants with any document(s), then presumably service can be effected by sending the documents to the defendants’ counsel.
[38] If the defendants did not deliver any documents in this proceeding, then the court will not have any information as to the defendants’ lawyers. The plaintiff corporation will want to consider what evidence, if any, is required as to name of and contact information for the lawyer by whom the defendants were represented when the minutes of settlement were executed.
Disposition
[39] For the reasons set out above, the plaintiff corporation’s motion is adjourned on the following terms:
- The plaintiff corporation’s motion for a judgment is adjourned and shall proceed to an oral hearing.
- The plaintiff corporation shall file a single motion record in which is included the following documents: a) A notice of motion setting out all of the relief that the plaintiff corporation is requesting; b) All evidence upon which the plaintiff corporation relies in support of the relief sought; c) Copies of the statement of claim and, if delivered, the statement of defence (with both pleadings included as individual documents, tabbed separate and apart from the evidence); and d) A copy of this endorsement (included as an individual document, tabbed separate and apart from the evidence).
- Unless, on the continuation of the motion, the plaintiff corporation seeks an order dispensing with the requirement to serve the defendants with documents related to the motion for judgment, the plaintiff corporation shall serve on the defendants, copies of (a) the motion record dated November 8, 2022, (b) this endorsement, and (c) any further documents (including the factum referred to in paragraph 4, below) filed for the purpose of the oral hearing.
- The plaintiff corporation shall file a factum addressing the relief sought on the motion. The factum shall comply with the most recent notice to the profession with respect to electronically filed documents, the hyperlinking of authorities, etc. For any authorities which are not available through hyperlinking, the plaintiff corporation shall include a pdf copy of the authority as an addendum to its factum.
[40] I remain seized of the matter and the motion shall be scheduled to proceed before me in accordance with the most recent notice to the profession with respect to scheduling civil motions.
[41] The court notes that for the motion in writing, the lawyer of record also swore the supporting affidavit. A lawyer is not permitted to make submissions in a matter in which they are the affiant. The lawyers of record for the plaintiff corporation will need to ensure that they do not run afoul of that prohibition when the motion proceeds to an oral hearing.
Madam Justice S. Corthorn Date: January 26, 2023