COURT FILE NO.: CV-18-00601016-0000 DATE: 2024-05-27
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: WISEMAN v. AIWERIOGHENE
BEFORE: ASSOCIATE JUSTICE D. MICHAEL BROWN
HEARD: January 8, 2024
COUNSEL: A. Simovonian for the plaintiff M. Tubie for the defendant
E N D O R S E M E N T
[1] This hearing was scheduled to deal with two motions: a motion by the plaintiff for a writ of possession on the defendant’s property and a motion by the defendant to set aside default judgment. Both motions were adjourned from July 26, 2023 due to the late service of the defendant’s motion record and again adjourned on November 28, 2024 due to the plaintiff’s failure to book and properly confirm their motion. At this hearing on January 8, 2024, the parties agreed to further adjourn the plaintiff’s motion pending the determination of the defendant’s motion. The hearing proceeded only on the defendant’s motion seeking to set aside default judgment. For the reasons that follow, the defendant’s motion is dismissed.
Test for setting aside default judgment
[2] In exercising its discretion on a motion to set aside default judgment the court should consider three factors:
a) Whether the motion was brought promptly without delay after the defendant learned of the default judgment;
b) Whether the circumstances giving rise to the default were adequately explained; and
c) Whether the defendant has an arguable defence on the merits. [1]
[3] These factors are not rigid rules. The court must assess the circumstances of each case to determine whether it is fair and just to exempt the defendant from the consequences of their default . [2]
The defendant did not move promptly
[4] This is a mortgage enforcement action. The plaintiff is the mortgagor of property owned by the defendant. Following the defendant’s default on monthly mortgage payments for April, July and August, 2017 and April 2018, the plaintiff served the defendant with a Notice of Sale Under Mortgage on May 8, 2018. The Notice of Sale stated that the total principal, interest and other charges owing under the mortgage was $450,760.78, and gave the defendant until June 20, 2018 to pay that amount or the property would be sold.
[5] On July 5, 2018, the plaintiff issued the Statement of Claim in this action seeking possession of the mortgaged property and judgment in the amount identified in the Notice of Sale Under Mortgage. The Statement of Claim was served personally on the defendant on July 9, 2018. In her affidavit sworn on this motion, the defendant says she learned about the Notice of Sale in June 2018. She acknowledges receiving the Statement of Claim when it was served.
[6] The plaintiff obtained default judgment on September 20, 2018. It is not clear from the record when the defendant first became aware of the default judgment. The defendant states in her supplementary affidavit dated July 20, 2023, that she was not aware of the default judgment until August 13, 2019. This is plainly incorrect as the defendant was before Justice Dow in June 2019 scheduling a motion to set aside default judgment. In oral submissions, counsel for the defendant stated that his client, in fact, learned of the default judgment in November 2018, but he was not able to provide a specific date. For the purpose of the motion, the plaintiff does not contest that the defendant learned of the default judgment in November 2018.
[7] The defendant did not take any steps to challenge the default judgment until May 27, 2019 when she filed a requisition for an urgent motion hearing before this court. The requisition was brought about by the plaintiff’s discovery that the default judgment was impacting her credit rating and preventing her from refinancing the property so that she could pay off the plaintiff. The parties attended before Justice Dow on June 25, 2019. The defendant was self-represented at that time. The plaintiff agreed to the scheduling of a motion to set aside default judgment and to hold off taking any steps to enforce the judgment on the condition that the defendant make a payment against the mortgage in the amount of $16,000.00. Justice Dow scheduled the defendant’s motion to set aside default judgment to be heard on September 26, 2019 and set a timetable for the exchange of material.
[8] The motion did not proceed on September 26, 2019. There is no explanation in the record before me as to why the motion did not proceed on September 26, 2019, nor as to what happened with the motion after that point. Based on my review of the court file for this action, it appears the following occurred:
- The September 26, 2019 motion did not proceed because it was not confirmed.
- The parties attended a case conference on September 27, 2019 before Justice Archibald at which time the motion was adjourned on consent to November 4, 2019.
- The motion came before Justice Morgan on November 4, 2019 but it was again adjourned to January 23, 2020.
- The motion did not proceed on January 23, 2020 because the motion was not confirmed.
[9] There is no evidence in the record before me or in the court file of the defendant taking any steps after January 2020 to advance her 2019 motion to set aside default judgment. I find that the defendant abandoned her 2019 motion in January 2020 when the motion was not confirmed.
[10] The defendant appears to have taken no steps with respect to the default judgment for more than three years after the abandonment of her 2019 motion. In February 2023, the plaintiff notified the defendant that he intended to seek a writ of possession for the property. On April 24, 2023, the plaintiff served its motion record for the writ of possession on the defendant, indicating a return date of July 26, 2023. On July 20, 2023, four days (excluding holidays) before the return of the plaintiff’s motion, the defendant, now represented by a lawyer, served a “Restated” Motion Record and supplementary affidavit for a motion to set aside default judgment.
[11] The parties appeared before Associate Justice Brott on July 26, 2023. The defendant sought to have the plaintiff’s motion adjourned until after the defendant’s motion could be heard. The parties agreed to a consent order whereby the plaintiff’s motion was adjourned to be brought back on with the defendant’s motion on a date to be obtained from the court office. The consent order further provided that the defendant would make a payment to the plaintiff of $30,000 by September 8, 2023 to be applied against the outstanding mortgage debt. Associate Justice Brott’s endorsement included a timetable for the delivery of materials for the defendant’s motion.
[12] The parties attended before me on November 28, 2023, expecting to argue both motions. However, the defendant’s motion to set aside default judgment was never booked for a hearing and although the defendant attempted to confirm the motion, the motion confirmation form was filed late. Further, the defendant’s motion materials were never uploaded to the Case Lines bundle for the November 28 hearing. I therefore adjourned both motions to come back before me on January 8, 2024 and awarded costs thrown away to the plaintiff in the amount of $1,000.
[13] The defendant’s motion to set aside default was not heard until January 8, 2024, more than five years after the defendant became aware of the default judgment. While some of the delay can be attributed to the court’s process and to the defendant’s inexperience with that process while she was self-represented, most of the delay is due to the defendant’s inactivity. The defendant did not first move to set aside default judgment until June 2019, six months after she became aware of it. That motion was abandoned in January 2020 and the defendant waited another three and half years before moving again to set aside default judgment in July 2023.
[14] The evidence filed by the defendant on this motion contains no explanation for the bulk of the delay in moving to set aside default judgment. Almost all of the evidence filed by the defendant on this motion relates to events that occurred before the initial return of her first motion in September 2019. The only evidence in the defendant’s two affidavits filed on this motion relating to events post-2019 is the following statement in her July 20, 2023 affidavit: “I have made payments from January 2019 to date.” These appear to be payments made against her mortgage, paid on a monthly basis to the plaintiff.
[15] Defendant’s counsel submitted in his factum that “the delay in bringing this motion was largely with the acquiescence of the Defendant [ sic ] who has not been prejudiced at all or insignificantly because of the ongoing mortgage payments.” I disagree. There is no evidence before me that the plaintiff has acquiesced in the defendant’s delay in bringing this motion. The plaintiff’s acceptance of mortgage payments is not evidence of acquiescence. The defendant had no reason to believe that those payments were anything other than payments being made against the plaintiff’s judgment on the mortgage debt.
[16] On the record before me, the plaintiff has always maintained that it is relying on the default judgment obtained. The plaintiff’s ongoing acceptance of payments from the defendant is consistent with that position. The plaintiff opposed the defendant’s 2019 motion to set aside default judgment and raised the issue of delay at that time. The plaintiff has given the defendant no reason to believe its position has changed since then.
[17] The total delay attributable to the defendant in moving to set aside default judgement is approximately four years. The defendant has not moved promptly.
The default has not been adequately explained
[18] The defendant admits receiving the Statement of Claim when it was served. The defendant’s evidence is that she did not defend the claim because she was led to believe by correspondence from counsel for the plaintiff at the time that the plaintiff would not proceed with the claim. The defendant claims that this correspondence led her to believe that the as long as she paid the mortgage arrears and brought the claim into good standing there would be no need to defend the claim. The evidence of the correspondence the defendant and the plaintiff’s former counsel counsel does not support the plaintiff’s position.
[19] The defendant first defaulted on her mortgage payments in July 2017. There is evidence in the record of correspondence between the defendant and former counsel for the plaintiff in late 2017 and early 2018 regarding the payments of arrears the defendant would be required to make to bring the mortgage into good standing. These included discussions between the parties about arranging for a second mortgage from another lender in the amount of $15,000 to finance the payment of arrears. Such a mortgage was arranged by the defendant’s mortgage broker in January 2018, but the defendant declined the opportunity and the mortgage remained in arrears. On February 20, 2018, then counsel for the plaintiff wrote to the defendant advising the mortgage remained in default in the sum of $3,346.67 and that if that sum was not paid by February 23, 2018, the plaintiff would commence power of sale proceedings.
[20] No payments on arrears were received following the February 2018 correspondence. On May 8, 2018, the plaintiff served a Notice of Sale Under Mortgage seeking payment of $450,760.78 or the property would be sold. On May 16, 2018, the defendant sent cheques by FedEx to the plaintiff’s former counsel which the defendant states were to cover the NSF fees for the defaulted payments and partial payment representing the balance owing for the month of April 2018. These cheques were never cashed by the plaintiff or his counsel.
[21] In June 2018 sent cheques by fed-ex directly to the plaintiff. This package was returned to the defendant unopened. The plaintiff’s evidence is that the packages with the cheques were returned unopened as the plaintiff was no longer willing to receive late or partial payments from the defendant.
[22] On July 9, 2018, the plaintiff served the Statement of Claim. The defendant’s evidence is that on receipt of the claim she contacted the plaintiff by phone who directed her to deal with his lawyer. Following those discussions, on July 10, 2018 the plaintiff’s former lawyer wrote to the defendant advising that in order to bring the mortgage into good standing and settle all costs with respect to the power of sale proceedings the plaintiff would have to pay a total of $35,133.68, including past mortgage payments and NSF charges owing totaling over $19,000, “other costs” relating to the mortgage totaling approximately $10,000 and litigation costs of over $5,000. The letter further demanded postdated cheques for the monthly mortgage payments through to December 2018 and advised that mortgage would not be renewed for another term. The letter concluded by stating that “the legal proceedings will continue until such time as the lender is satisfied that you will not renege in your obligations under the terms of the mortgage that you have with him and as such, time is of the essence in you attention to the matter.”
[23] The defendant did not respond to the July 10, 2024 letter. The defendant’s evidence is that on August 13, 2018, the defendant again sent cheques by Fed-Ex to the plaintiff’s former lawyer. These cheques consisted of 4 cheques for past mortgage payments totaling just under $9,000, a certified cheque in the amount $1,819.00 in U.S. funds [3] , and 3 post-dated mortgage cheques for October through December 2018.
[24] The defendant’s reliance on the correspondence from the plaintiff’s former lawyer as a basis for not defending the claim is neither reasonable nor credible. The plaintiff cannot reasonably have relied on the plaintiff’s statements in 2017 and early 2018 regarding the defendant’s ability to bring the mortgage into good standing. The correspondence from the plaintiff’s lawyer made it clear that the plaintiff’s ability to bring the mortgage into good standing merely by paying the monthly mortgage arrears expired in February 2018, after which the plaintiff intended to commence power of sale proceedings.
[25] The plaintiff’s position following the commencement of the action is laid out in the July 10, 2018 letter. That letter cannot reasonably be interpreted as plaintiff advising he would not be proceeding with his claim. At most, the letter might be interpreted as the plaintiff’s willingness to consider withdrawing the claim upon the defendant’s payment of the $35,133.68 demanded. While the defendant made efforts to pay some of the amounts demanded in the July 10, 2028 letter (approximately 30-35% of the total), the defendant disputes many of the amounts demanded and has never shown any intention of paying those amounts. The defendant could not reasonably have believed in the circumstances that the plaintiff would not be pursuing the claim nor that defendant need not defend. The defendant has not adequately explained her default in failing to deliver a defence in accordance with the Rules.
No arguable defence on the merits
[26] The defendant’s materials on this motion include a 14-paragraph draft Statement of Defence. The defendant’s proposed defence parallels the defendant’s explanation for not defending the claim. In the draft Statement of Defence, the defendant concedes that she initially defaulted on her mortgage payments but alleges that the default would have been cured but for the plaintiff’s refusal to accept payments that allegedly would have brought the mortgage into good standing. The defendant further alleges that she relied to her detriment on the plaintiff’s representations that the mortgage could be brought into good standing upon payment of those arrears. The defendant alleges that the plaintiff engaged in sharp practice and acted in bad faith. The defendant also alleges that the arrears on the mortgage were minimal and she relies on the doctrine of de minimis non curat lex .
[27] On the record before me, I find that the defendant has not demonstrated that she has an arguable defence on the merits. The only evidence put forward by the defendant of the plaintiff’s refusal to accept payment of arrears to put the mortgage into good standing relates to the defendant’s attempts to pay mortgage arrears after the sale under mortgage proceedings had commenced. Section 32 of the Mortgages Act, R.S.O. 1990, c. M.40 , provides that a Notice of Sale Under Mortgage may be served within 15 days of default. The defendant had more than 8 months between the missed payments and the commencement of the sale proceedings to cure her default and the plaintiff gave her several opportunities to do so, including by facilitating a second mortgage to finance payment of the arrears. After serving the Notice of Sale Under Mortgage seeking payment of the entire amount of principal and interest outstanding on the mortgage, the plaintiff was under no obligation to continue to allow the mortgage to be brought into good standing simply on payment of the monthly arrears. The plaintiff’s refusal to accept the defendant’s payments at this stage was not an act of bad faith. The plaintiff was merely asserting his rights under the Mortgages Act .
[28] Similarly, the defendant cannot reasonably rely on the plaintiff’s representations regarding the payment of arrears and bringing the mortgage into good standing made months before the sale under mortgage proceedings were commenced. Those representations cannot reasonably be interpreted to apply after the commencement of the proceedings, by which time the plaintiff was seeking payment of all outstanding principal, interest and charges owing on the mortgage.
[29] It is not clear to me how (or whether) the doctrine of de minimis non curat lex would apply to the plaintiff’s claims. The defendant made no legal argument and provided no authority on this point. This defence is not even mentioned in the defendant’s factum. The defendant has the onus on this motion of demonstrating an arguable defence on the merits. The defendant has not discharged this onus with respect to the doctrine of de minimis non curat lex .
[30] On the record before me, I find that the defendant has not demonstrated any arguable defence on the merits. I also find that even if the defendant’s proposed defence had merit, for all practical purposes that defence is now moot. The mortgage by its terms was set to terminate when it matured on December 16, 2018 unless the plaintiff agreed to a renewal. The plaintiff’s former lawyer made it clear in his letter of July 10, 2018 that the mortgage would not be renewed in December, regardless of whether the demanded payments were made. The mortgage was not renewed on December 16, 2018. It terminated on that date, and all outstanding principal and interest under the mortgage became due and payable.
[31] Even if I were to allow the defendant’s motion and the defendant was entirely successful in her defence of the action, the defendant would not be in a materially better position than she is today. Given the termination of the mortgage in 2018, the plaintiff would still be entitled to immediate payment in full of the outstanding principal and interest under the mortgage as well as any additional charges that the plaintiff was entitled to pursuant to its terms. The only difference would be that the plaintiff’s rights in this regard would be deemed to have arisen on termination in December 2018 as opposed to seven months earlier when the plaintiff served it Notice of Sale Under a Mortgage. This 7-month difference might result in a slight reduction in the defendant’s potential liability for interest and enforcement costs, but any such savings would likely be entirely offset by the defendant’s unrecoverable legal costs of defending this action through discovery and trial. In my view, if I were to allow the defendant’s motion, the resulting litigation on the merits would become a largely academic exercise with little or no practical upside to the defendant and significant potential downside to both parties in the form of legal costs and delay.
Disposition
[32] In summary, for the given reasons above, I find that:
a) the defendant did not move promptly in bringing this motion after learning of the default judgment;
b) the defendant has not adequately explained the circumstances giving rise to her default in failing to defend the action within the time prescribed by the Rules; and
c) the defendant has not demonstrated that she has an arguable defence to the plaintiff’s claims on the merits.
[33] Given these findings and my finding that, for practical purposes, the defendant’s proposed defence of the action has been rendered moot by the termination of the mortgage, I find that it would not be fair and just to exempt the defendant from the consequences of her default. The defendant’s motion to set aside default judgment is dismissed.
Costs
[34] As the plaintiff was entirely successful on the motion, he should have his costs. At the return of the motion, the plaintiff sought costs on the partial indemnity scale if successful in the amount of $ 10,957.91, based on bill of costs filed. The defendant was seeking reduced costs in the amount of $2,500 if successful on the basis that the defendant was seeking the court’s indulgence by excusing the defendant’s default. The defendant submitted that the plaintiff should only be entitled to $1,000 in costs given the plaintiff’s conduct as evidenced in the record.
[35] I find no fault in the plaintiff’s conduct on this motion, let alone one that would justify a reduced award of costs. The plaintiff shall have his partial indemnity costs in the amount reflected in the bill of costs as requested, which I find to be within the reasonable expectations of the parties given the work done on the motion and the importance of the issues to the parties. The defendant shall pay to the plaintiff costs of the motion fixed in the amount of $ 10,957.91, inclusive of HST, payable within 30 days.
D. Michael Brown, Associate Judge DATE: May 28, 2024
Footnotes
[1] Mercedes-Benz Financial Services v. Market Dimensions Inc. , 2018 ONSC 1926 at para 5 , HSBC Securities (Canada) Inc. v. Firestar Capital Management Corporation , 2008 ONCA 894 at para 2
[2] Mercedes-Benz Financial Services v. Market Dimensions Inc. , 2018 ONSC 1926 at para 6 ; Morgan v. Municipality of Toronto Police Services Board at para. 19
[3] Although the exhibit to the defendant’s affidavit includes two such certified cheques, they appear to be copies of the same cheque. The defendant’s affidavit does not explain what this amount is for.