RICHARDSON PIONEER LIMITED PLAINTIFF/RESPONDENT - v. -, 2023 SKKB 265

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 265 Date: 2023 12 06 Docket: QBG-RG-01577-2022 Judicial Centre : Regina BETWEEN: RICHARDSON PIONEER LIMITED PLAINTIFF/RESPONDENT - and - SHAUN STADNYK DEFENDANT/APPLICANT Counsel: James P. Kroczynski for the plaintiff/respondent Travis K. Kusch for the defendant/applicant FIAT MITCHELL J. DECEMBER 6, 2023 A. Overview and Factual Background [ 1 ] Mr. Shaun Stadnyk [Mr.

Stadnyk] applies pursuant to Rule 10-13 of The King’s Bench Rules to set aside a default judgment in the amount of $133,261.92 issued in favour of Richardson Pioneer Limited [RPL] on October 19, 2022. If such relief is granted, Mr. Stadnyk seeks leave to file his statement of defence. [ 2 ] Mr. Stadnyk had entered into an agreement to supply barley to RPL. However, due to drought conditions during the summer of 2021, Mr. Stadnyk was unable to provide the amount of barley – approximately 25,000 bushels – he had agreed to deliver to RPL. [ 3 ] Mr.

Stadnyk began to communicate with a representative of RPL to explore the possibility of a buyout arrangement which was provided for in the contract. These communications left him optimistic and believing that such an arrangement would be achieved. [ 4 ] Instead, on or about September 6, 2022, Mr. Stadnyk was served with the statement of claim commencing this action. [ 5 ] Mr. Stadnyk did not immediately respond because, he alleges, he had been advised by the process server that no further action would be taken against him until the parties had completed mediation.

This information, however, proved inaccurate. [ 6 ] Eventually, on or about January 4, 2023, Mr. Stadnyk was served with RPL’s notice of intention to enforce, and judgment. Mr. Stadnyk asserts that it was only then that he became aware of the outstanding judgment against him.

[7] On February 8, 2023, the parties proceeded to mediation under The Saskatchewan Farm Security Act, SS1988-89, c S-17.1 [Act]. This mediation failed to achieve a resolution.

The day prior to this mediation – February 7, 2023 – Mr.Stadnyk’s counsel advised RPL’s counsel by email that should the matter not be resolved at the mediation, his client would bring anapplication seeking to set aside the noting for default, and the default judgment. [8] The issues addressed below are: 1) Should the noting for default, and the default judgment be set aside pursuant to Rule 10-13 of The King’s Bench Rules? 2) If so, what are RPL’s costs thrown away? [9] These reasons explain why I have concluded that this application should be allowed and the noting for defaultand default judgment set aside. Mr.

Stadnyk shall file his statement of defence within 14 days from the date of my order. [10] As well, RPL is entitled to its costs thrown away in the amount of $6,746 payable within 60 days from the dateof my order. B. Law [11] The decision whether to set aside a default judgment is discretionary. There is a large body of jurisprudenceidentifying, and elaborating on, the factors which a court should weigh when exercising this discretion. Although the inquiry is largelyfact-driven, the legal analysis involves consideration of four non-exhaustive factors.

These are: 1) Was the application to set aside the default judgment made expeditiously? 2) Is there a satisfactory explanation for any delay in commencing the application? 3) Does the applicant’s proposed defence raise arguable issues? 4) Is the respondent seriously prejudiced if the default judgment is set aside?

See, for example: Ballentyne v Benard, 2012 SKCA 23 at paras 8, 11-12, 385 Sask R 280 [Ballentyne]; Shinkaruk v Neufeld BuildingMovers Ltd., 2013 SKQB 411 at para 5, 432 Sask R 247 [Shinkaruk]; Desbiens v Warken, 2020 SKQB 145 at paras 18-27, and 30, 61 CPC (8th) 187 [Desbiens], and Czerwonka v Williams, 2022 SKKB 204 at para 11. [12] It is settled that this legal analysis applies both to setting aside a noting for default and to setting aside a defaultjudgment. See: Bank of Montreal v Pauls (1984), (SK CA), 35 Sask R 204 (CA).

As well, it is generally accepted thatit is a weightier matter to set aside a default judgment. See: Shinkaruk at para 6. Indeed, Mr. Kroczynski for RPL submitted that settingaside a default judgment is, in and of itself, prejudicial to RPL. [13] In Ballentyne, Caldwell J.A. for the court drew a distinction between a “wilful” failure by a defendant torespond to a statement of claim, and “negligent” conduct resulting in failing to file a statement of defence.

At para. 14, he explained: [14] This point is particularly apt with respect to defendants who, like the appellants, do not appreciate the risk of not responding to astatement of claim. Despite the cautionary wording on the face of a statement of claim, it is not uncommon that an individual will fail toappreciate that not responding in a legal way to a statement of claim will result in a legally enforceable judgment against him or her bydefault. There may be many reasons for this.

For example, an individual may fail to read the document out of fear, or he or she may readit but not understand it or what it requires, or may fail to read it carefully enough, or may simply ignore it as yet another tactic in an on-going dispute with the party opposite.

Such conduct may well be negligent; but, if it falls short of a deliberate decision to allow adefault judgment to issue, such conduct, in and of itself, does not justify denial of an application to set aside a default judgmentbrought in a timely way where the applicant has shown an arguable defence and no irreparable prejudice to the plaintiff if thedefault judgment is set aside.

In short, in my opinion, a “wilful” default (i.e., one which could in and of itself justify dismissal of anapplication to set aside the default judgment) occurs where the defendant understands the import of a statement of claim and deliberatelydecides to let the matter go to default judgment, whether to vex the plaintiff with the cost, delay and inconvenience of defending anapplication to set it aside or otherwise. And, that is not the case here. [Emphasis added] C. Should Default Judgment Be Set Aside? 1. Delay in Commencing Application [14] There is a dispute on the facts as to when Mr.

Stadnyk came to know of the default judgment entered againsthim. [15] It is clear that he was served with RPL’s statement of claim on September 6, 2022. It is also clear that becauseMr. Stadnyk failed to respond, default judgment was entered against him and was issued on October 19, 2022. [16] Mr. Stadnyk asserts that he did not learn of the default judgment until January 4, 2023 when he was served withthe notice of intention to enforce, and the judgment. [17] However, Mr. Kroczynski asserts that Mr. Stadnyk is being disingenuous, at best. He says that Mr.

Stadnyklearned of this default judgment on or about November 7, 2022 when Information Services Corporation [ISC] notified the parties that thejudgment had been registered against his property. The process server, Ms. Erin Spray, averred in her affidavit sworn on May 15, 2023

[Spray Affidavit] that Mr. Stadnyk communicated with them on November 8, 2022 expressing upset at receiving the ISC notice through the mail. See: Spray Affidavit at paras. 6-7. [ 18 ] Mr. Kroczynski submits further that this evidence indicates that Mr. Stadnyk is being less than candid with the court. Consequently, he should be denied the relief he seeks. Mr. Kroczynski referred me to Saskatchewan Wheat Pool v Feduk , 2003 SKCA 46 at para 50 , 232 Sask R 161 where the court references certain passages taken from I.C.F. Spry, The Principles of Equitable Remedies , 6 th ed (Toronto: Carswell, 2001).

To paraphrase, this passage re-states the non-controversial proposition that an applicant who does not come to court “with clean hands” cannot expect to be granted equitable relief, such as specific performance. [ 19 ] Not surprisingly, Mr. Kusch takes exception to this characterization of his client’s evidence. He asserts that Mr. Kroczynski did not cross-examine Mr. Stadnyk on his affidavit, and it would be inappropriate to make such a damning finding on the record before the court. [ 20 ] On balance, I am not prepared to conclude Mr. Stadnyk is disqualified from receiving the relief he seeks on this basis.

Put most charitably, I find that Mr. Stadnyk learned of the default judgment on November 7, 2022 but did not commence this application until May 1, 2023. The parties appear to agree, however, that Mr. Stadnyk’s counsel advised RPL at the mediation under the Act that should the matter not be resolved there, this application would be brought. [ 21 ] At worst, the delay in commencing this application is approximately six (6) months, i.e. November 7, 2022 to May 1, 2023. While Mr. Stadnyk could, and should, have acted with greater alacrity, I do not find this delay to be exceptional, let alone inordinate.

In any event, the delay in commencing an application to set aside a default judgment alone will not defeat it, even if the explanation for such delay is less than compelling. See for example, Saskatchewan Government Insurance v Rabb , 2021 SKQB 207 at para 24 [ Rabb ] , and the authorities referred to in that paragraph. 2. Explanation for Delay [ 22 ] Despite the fact that I found this delay alone insufficient to disqualify Mr.

Stadnyk from obtaining the relief which he seeks, an explanation for the six-month delay is warranted. [ 23 ] Reviewing the evidence, it appears that much of the delay is attributable either to a significant miscommunication between Mr. Stadnyk and the process server, Ms. Spray, or a serious misunderstanding of the legal process on his part. [ 24 ] The explanation for this delay is set out at paras. 16 to 22 of Mr. Stadnyk’s affidavit sworn April 28, 2023. He avers as follows: 16. On September 6, 2022 the process server and I were able to discuss the mater by phone, wherein I agreed to accept service by email.

On the phone call, I expressed that I disagreed that Richardson had a valid claim against me. The process server indicated that I was being served, but that before anything substantive happened I would be able to proceed to mediation. 17. The process server followed up by email and confirmed that before anything further happened. Richardson’s legal counsel would contact me to discuss the matter… 18. I did not hear anything for several months, but given the representations made by the process server, I awaited Richardson, or their legal counsel’s, call.

It was my understanding nothing would proceed until I received a phone call or a request for mediation dates. 19. On January 4, 2023, I was again contacted by the process server. At this point in time, I was served with the Notice of Intention to Enforce and Judgment. Again, the process server indicated that I would have the chance to mediate. I now understand that the mediation she was referring to was the mediation under the [ Act ]… 20. Upon review of the email, it was apparent to me that something was incorrect as Richardson was purporting to enforce against me.

I was unsure how they do that given that I had not granted them any security. 21. It was not until I received the notice that I would have to proceed through the [ Act ] Mediation process that I realized a judgment had been obtained against me with mediation scheduled for February 8, 2023. I had not received a copy of the judgment prior to January, 2023. 22. At that time, I quickly retained counsel. [ 25 ] For her part, Ms. Spray’s evidence does not greatly dispute Mr. Stadnyk’s evidence. However, she is far less categorical about the content of her communications with him.

For example, during her telephone conversation with Mr. Stadnyk on November 8, 2022, she avers that she told him she “had no control over the litigation process”, and had “no input” as to how RPL’s lawyers “handles their legal matters”. See: Spray Affidavit at para. 7. [ 26 ] The question is whether Mr. Stadnyk’s failure to file a statement of defence in a timely manner amounts to “wilful” or “deliberate” conduct. These terms refer to actions different from “unreasonable” or “negligent” actions and connote blameworthiness.

See, especially: Ballentyne at para 14 ; and Hubbard v Acheson , 2009 BCCA 251 at para 20 , 93 BCLR (4 th ) 315 . [ 27 ] I am persuaded that Mr. Stadnyk’s failure to respond to RPL’s claim was neither wilful nor deliberate. To be sure, it was misguided, if not negligent. I accept his counsel’s submission that this situation is not one where Mr. Stadnyk either wilfully or knowingly ignored the statement of claim and the consequences of failing to join issue with it. [ 28 ] Accordingly, I conclude that Mr. Stadnyk has provided a satisfactory explanation for the delay in bringing this application.

3. Arguable Defence [ 29 ] This factor requires a court to assess whether a defendant seeking to set aside a default judgment has demonstrated an arguable defence on a bona fide issue to be tried. See: Desbiens at para 51 . It is not necessary for a defendant to prove that the proposed defence will succeed, only that it is a reasonable defence on the merits and worthy of further investigation. See: Rabb at para 29 , and Desbiens at para 36 . [ 30 ] The statement of claim asserts a breach of contract by Mr. Stadnyk.

His counsel asserts that his client has advanced a meritorious defence, one which is worthy of further investigation. He pleads among other things that: 1) RPL failed to comply with the buyout provision in the contract once Mr. Stadnyk provided notice of his default; 2) RPL failed for over five months to mitigate its damages by ignoring Mr. Stadnyk’s repeated requests to adhere to the buyout requirement of the default in supplying the barley, and 3) RPL failed to calculate the buyout as defined in the contract to determine its damages under the contract terms.

Instead, RPL allowed the replacement cost of the barley to increase by nearly 50% despite being aware of Mr. Stadnyk’s inability to deliver grain in accordance with the contract. [ 31 ] As well, Mr. Stadnyk contends that courts in this province have recognized that a grain company must act expeditiously in replacing undelivered grain. See, for example: United Grain Growers Ltd. v 3L Cattle Co. , 2005 SKQB 142 at paras 43- 46 , 261 Sask R 83 . Here, he alleges RPL failed to mitigate its damages by not purchasing a replacement crop in a timely fashion. [ 32 ] It may well be that Mr.

Stadnyk has a tough row to hoe in establishing these proposed defences. Yet, this factor only asks whether in light of the available information the proposed statement of defence raises properly triable issues which are worthy of further investigation. See , for example, Rabb at para 36 , and Desbiens at para 53 . I am persuaded that the defence asserted by Mr. Stadnyk satisfies this minimal standard. 4. Prejudice to the Respondent [ 33 ] The fourth and final factor asks whether RPL will suffer serious prejudice should the default judgment be set aside.

To meet this standard, the prejudice alleged must be serious or result in irreparable harm to RPL. See , for example: Rabb at para 38 , and Desbiens at para 55 . [ 34 ] Counsel for RPL did not press the issue of prejudice strongly in his submissions. He stated that setting aside a default judgment is prejudicial to his client, as it puts RPL in a position of proceeding to trial in an effort to prove its claim. However, he did not suggest that this delay had impaired RPL’s ability to prosecute its action in any way.

I am not persuaded that this state of affairs amounts to serious prejudice or results in irreparable harm to RPL if the default judgment is set aside. [ 35 ] I address the issue of RPL’s costs thrown away in Part D below. 5. Principles of Fundamental Justice and Equity [ 36 ] As the Court of Appeal in Ballentyne instructed at para. 13 , “the fundamental principle relevant to the exercise of judicial discretion in these cases is that it is necessary to ensure that the application of the Court’s rules and principles does not violate the principles of fundamental justice and equity”.

Thus, once the various criteria identified above have been reviewed in the context of a Rule 10-13 application, it is necessary to assess whether making an order setting aside a default judgment would be consistent with the principles of fundamental justice and equity. [ 37 ] I have found that Mr. Stadnyk has met the evidentiary threshold under Rule 10-13 of The King’s Bench Rules .

Taking these considerations into account, I am satisfied that in these circumstances the principles of fundamental justice and equity commend an order setting aside the default judgment RPL obtained against him on October 19, 2022, and permitting Mr. Stadnyk to test the strength of his defence at trial. [ 38 ] The default judgment of $133,261.92 against him is substantial. I am persuaded Mr. Stadnyk should at least have the opportunity to defend against it. He should also be mindful that if he fails at trial, he likely will face a significant costs order. 6. Conclusion [ 39 ] I have concluded that Mr.

Stadnyk’s application to set aside the default judgment against him should be allowed. On this application he included a proposed statement of defence, and I direct that this document be filed within 14 days from the date of the issuance of my order. D. What are RPL’s Costs Thrown Away ? [ 40 ] As I have concluded that the default judgment should be set aside, the last issue to be determined is what are RPL’s costs thrown away in this case. 1. Law [ 41 ] There are authorities from this province where “costs thrown away” were ordered in circumstances such as these.

These authorities included: Margon Holdings Ltd. v Starrpass Properties Inc. , 2014 SKQB 328 , 458 Sask R 250 ; Browne Building Services Ltd. v North Country Homes Ltd. , 2010 SKQB 36 , 349 Sask R 72 ; and Dubuc Osland v James Smith Cree Nation , 2003 SKQB

110 , 231 Sask R 161 . However, there is little, if any, discussion in those cases about what is connoted by the term “costs thrown away”. Rather, and not surprisingly, awards of costs thrown away made in those and other authorities appear to be case-specific. [ 42 ] Some guidance on this issue is obtained from Ontario jurisprudence, however. F or example, the oft-cited authority, Graziano v Ciccone , 2017 ONSC 362 at para 8 [ Graziano ] , holds that an award of costs thrown away is not a punitive measure.

Rather, it is intended to compensate a party for its efforts in dealing with an application to set aside a default judgment. Typically, such a costs award is intended to indemnify a party fully for monies already expended. See: Graziano at para 9 . To similar effect, see: Nelson v Chadwick , 2019 ONSC 4544 at para 27 . [ 43 ] In Oz Merchandising Inc. v Canadian Professional Soccer League Inc. , 2016 ONSC 4272 [ Oz Merchandising ] , Hackland J. stated at para. 5 in part: . . .The term ‘costs thrown away’ normally connotes complete indemnification although, the court has a residual discretion to order otherwise.

The complete indemnification does not flow from any misconduct on the defendants’ part as both parties seem to suggest in their written submission, rather it simply means costs unnecessarily and uselessly incurred by the defendants’ actions ie. costs that were thrown away. The plaintiffs are entitled to be reimbursed for such expenditures on a full indemnity basis. 2. Analysis [ 44 ] Mr. Kroczynski in his non-controversial affidavit sworn on May 15, 2023 [Kroczynski Affidavit] avers that by April 5, 2023 RPL had paid to its solicitors legal fees in the amount of $16,067.50.

See: Kroczynski Affidavit at para. 7. [ 45 ] Yet, RPL’s counsel is claiming only $11,309.93 as costs thrown away. This amount is comprised of $8,302.50 in solicitor fees, $2,098 in disbursements and applicable taxes. It pertains to professional services rendered in preparation, issuance, and registration of the default judgment; all preparation and service of the land sale notices, and arranging for the mediation up to his initial contact with Mr. Kusch, counsel for Mr. Stadnyk. See: Kroczynski Affidavit at para. 7. [ 46 ] Mr.

Kusch submits that RPL should receive an award of only $2,446 as its costs thrown away in this matter. [ 47 ] Respectfully, I do not accept either position. [ 48 ] I accept that “costs thrown away” are intended to indemnify plaintiff’s counsel for “ cost[s] unnecessarily and uselessly incurred by the defendants’ actions”: Oz Merchandising at para 5 . Yet, as with all orders for costs, this remains a discretionary decision.

See further: Prairie Provisions Inc. v KT Canada Corporation (21 June 2023) Regina, QBG-RG-01909-2020 (Sask QB), leave to appeal denied Jeevan Toprani, KT Canada Corp., and KT Clytan Corp. v Prairie Provisions Inc. (14 November 2023) Regina, CACV 4242 (Sask CA). [ 49 ] Applying the general principles relating to “costs thrown away”, it is significant that although RPL filed invoices reflecting the total amount of legal fees and disbursements it has expended on this matter, it is not seeking full indemnification of those costs. It seeks reimbursement for monies expended until Mr.

Stadnyk obtained legal counsel who then communicated with Mr. Kroczynski. In these circumstances, I am persuaded that RPL has acted reasonably, and is seeking indemnification for costs unnecessarily and uselessly incurred by Mr. Stadnyk’s inattention and inaction, to paraphrase Oz Merchandising . [ 50 ] That said, I exercise my discretion to order less than complete indemnification in this matter. I conclude that RPL shall be indemnified in the amount of $6,746 ($5,000 for legal fees and $1,746 for disbursements) as its costs thrown away payable to RPL within 60 days of the date of my fiat. E.

Orders [ 51 ] In conclusion, I made the following orders: 1) The default judgment granted October 19, 2022 in favour of RPL is set aside; 2) Mr. Stadnyk shall have 14 days from the date of my order to serve and file his statement of defence, and 3) RPL shall have its costs thrown away in the amount of $6,746 payable within 60 days from the date of my order. J. G.G. MITCHELL