Toronto Dominion Bank v. Hunik, 2011 ABQB 610

Court of Queen ’ s Bench of Alberta Citation: Toronto Dominion Bank v. Hunik, 2011 ABQB 610 Date: 20110930 Docket: 0801 04669 Registry: Calgary Between: The Toronto Dominion Bank Plaintiff - and - Kelly Hunik, 1119257 Alberta Ltd. and Wayne Newby Defendants _______________________________________________________ Reasons for Judgment of J.T.

Prowse Q.C., Master in Chambers _______________________________________________________ Application to set aside a judgment obtained in default of defence [ 1 ] The Defendant Kelly Hunik applies to set aside a judgment entered against him for approximately $26,000 in favour of the Plaintiff The Toronto Dominion Bank (“TD”). [ 2 ] TD had sued Hunik as a transferee who had become the registered owner of land subject to an existing TD mortgage. Under

section 58 of the Land Titles Act a transferee, such as Hunik, is subject to an implied covenant to repay a mortgagee, such as TD, who holds a mortgage against land at the time of transfer. It turns out that the land, plus TD’s legal costs, amounted to $26,000 more than the value of the land, and Hunik became liable under

section 58 for the shortfall.

[ 3 ] Hunik deposes that the land was transferred into his name without his knowledge or consent, and he wishes to set aside the judgment so that he can defend the claim on that basis. Setting aside the default judgment as of right [ 4 ] Hunik’s first argument is that he can set aside the judgment as of right, because he was not served in accordance with the rules of court. Hunik was personally served with the statement of claim.

He says he does not recall being served, but he does not deny that he was served. [ 5 ] With respect to notice of the application resulting in the judgment against him, this was served by posting it on the door of the premises where Hunik had been served with the statement of claim. Without more, this is not proper service. However, Hunik acknowledges that he received these documents.

Hunik now argues that this service is faulty because TD did not have an order allowing him to be served by posting it to his door. [ 6 ] I agree with counsel for TD that where documents have in fact come into the possession of a party, that party cannot maintain that they were not adequately served: see Hansraj v. Ao , 2004 CarswellAlta 849, 2004 ABCA 223 , 354 A.R. 91, 34 Alta.L.R. (4 th ) 199, [2005] 4 W.W.R. 669, at para. 31 . [ 7 ] The documents posted to Hunik’s door notified him that the application for judgment against him would be heard in Master’s Chambers on August 13, 2008.

On that date the application was adjourned, in open court, to September 3, 2008, when the application was heard and judgment was granted against Hunik. [ 8 ] My conclusion is that Hunik was served with the statement of claim and application for judgment, and cannot set aside the judgment, as of right, for lack of service. Setting aside the default judgment under Rule 9.15(3) [ 9 ] Hunik alternatively applies to set aside the judgment against him under Rule 9.15(3), which states that “The Court may set aside, vary or discharge a judgment in default of defence an any terms the Court considers just”.

However, it is clear that this Rule (formerly Rule 158) applies only to judgments granted by the clerk on praecipe, and not to judgments granted by a master or a judge: see Webmore Financial Services Ltd. v. James M. Drummond Holdings Ltd. , 1981 CarswellAlta 214, 24 C.P.C. 218, 33 A.R. 493 (Master) , and Palin v. Duxbury , 2010 CarswellAlta 2517, 2010 ABQB 833 . The judgment against Hunik was granted by a master.

Setting aside the default judgment under Rule 9.15(1) [ 10 ] Hunik alternatively seeks to bring himself under the provisions of rule 9.15(1), which gives the court the authority to set aside a judgment that was made: (

a) without notice to him, or (

b) following a hearing at which he did not appear because of an accident or mistake or because insufficient notice of the hearing. Was the judgment granted against Hunik without notice to him? [ 11 ] As indicated above, Hunik had actual notice of the hearing which resulted in judgment against him [per rule 9.15(1)(a)], and the notice to him was sufficient [per rule 9.15(1)(b)].

Did Hunik fail to appear because of an accident or mistake, pursuant to rule 9.15(1)(b)? [ 12 ] Where a defendant asserts that he did not attend court due to an accident or mistake, the defendant typically begins by establishing that he wanted to attend, and then by giving an explanation for non-attendance which amounts to an accident or mistake. [ 13 ] This case does not match the typical situation, because Hunik does not depose that he intended to appear in court to oppose the application for judgment against him. [ 14 ] Hunik’s evidence as to his response to the claim begins with a phone call that he received warning him that there was a problem coming his way.

He pulled a title to the unit in question and noticed that it was in his name. He then spoke to David Goldenberg about this issue. Goldenberg was married to Hunik’s mother, but living separate and apart from her. Hunik had a business relationship with Goldenberg. He was aware that Goldenberg used to be a lawyer but was no longer practising as a lawyer. Hunik apparently believed that Goldenberg was involved in having the title transferred into Hunik’s name. Goldenberg said he would take care of the issue. [ 15 ] Next Hunik was served with the foreclosure statement of claim.

He does not recall being served, and he doesn’t recall discussing this with Goldenberg, but it seems likely he did, because Goldenberg filed a demand of notice on behalf of Hunik. Hunik was unaware that Goldenberg had filed this demand of notice. [ 16 ] Hunik was then served with the documents seeking judgment against him, returnable initially on August 13, 2008. He believes he called Goldenberg again, this time about these application documents, and had an angry conversation with him, but he does not have a specific recollection of what was said.

Other than that, Hunik did not respond to the application documents. He did not resolve to attend in court on August 13, 2008 and he did not ask anyone to appear on his behalf. [ 17 ] I am unable to conclude that Hunik failed to attend on August 13, 2008, or subsequently on September 3, 2008, due to accident or mistake. In fact, he never intended to appear. Consequently, I am unable to set aside the judgment against Hunik pursuant to Rule 9.15(1)(b).

Should the court exercise its discretion in Hunik ’s favour? [ 18 ] If I had the jurisdiction to allow Hunik to set aside the judgment, I would have granted it because, while his explanation for his failure to respond to foreclosure claim, and for his lateness in seeking to set aside the judgment against him, were both inadequate, he offered to pay the full amount of the judgment against him into court, pending the outcome of his application to set aside. In my view, this would have eliminated the prejudice which would otherwise occur to TD due to Hunik’s neglect.

However, having concluded that Rule 9.15 does not provide me with jurisdiction to set aside the default judgment against Hunik, I dismiss his application in that regard. Leave to make a late appeal [ 19 ] Hunik applied to me to extend time for him to appeal the judgment against him, but I believe that it would be more appropriate for him to seek that extension from a Justice of the Court of Queen’s Bench. I note that there has been a recent change to the rule 6.14(3) which loosens the test for what evidence might be placed before the court if an appeal is heard.

Costs [ 20 ] If counsel cannot agree as to costs, they may approach me for a ruling in that regard.

Heard on the 22 nd day of August, 2011. Dated at the City of Calgary, Alberta this 30 th day of September, 2011. J.T. Prowse Q.C. M.C.C.Q.B.A. Appearances: Brian E. Silver Silver Law Firm for the Applicant Kelly Hunik William R. Pieschel, Q.C. Parlee McLaws LLP for the Respondent