Local Service District of Bay St. George South v. Peter (John) Harris, 2014 NLPC 1412

In the Provincial Court of Newfoundland and Labrador Judicial Centre of Stephenville (Small Claims Division) Citation: Local Service District of Bay St. George South v. Peter (John) Harris, 2014NLPC 1412C00043 Date: October 31, 2014 Docket: 1412C00043 BETWEEN: Local Service District of Bay St. George South Plaintiff AND: Peter (John) Harris Defendant Before: The Honourable Judge K. Howe Place of Hearing: Stephenville, NL Appearances: All parties were self-represented

Summary: Application to set aside default judgment granted where applicant claimed to not know that he could be served by mail and that he musthave thrown away the statement of claim, subject to proviso that the he pay additional costs of $150 to offset the Plaintiff’s expenses inresponding to the application. Authorities cited: CASES CONSIDERED: Maurice’s Service Center Limited v. Ryan and Ryan 2005 NUCJ 28 , [2005] N.J. No. 28(NLPC)(QL); XXcel Designs v. Dicks [2010] N.J. No. 328 (NLPC)(QL); Langor v. Spurrell (1997) (NL CA), 157Nfld. & P.E.I.R. 301 (NLCA); House of Haynes (Restaurant) Limited v.

Snook, (1995) (NL CA), 134 Nfld. & P.E.I.R.23 (NLCA); Kleinfelder v. Stoy [1994] B.C.J. No 2823 (BCPC)(QL), and Bank of Nova Scotia v. Pryor [2002] N.J. No. 5 (NLPC)(QL). STATUTES AND REGULATIONS CONSIDERED: Small Claims Act, RSNL1990 cS-16; Municipalities Act, 1999, SNL1999 cM-24, and Small Claims Rules, NLR 52/97. RULING ON APPLICATION TO SET ASIDE DEFAULT JUDGMENT

HOWE, PCJ: The Default Judgment: [1] The Plaintiff, the Local Service District of Bay St. George South (hereafter simply “the Local Service District”) filed a Statement ofClaim seeking to recover unpaid “Service Fees” for the years from 2007 to and 2012 in the amount of $650 together with its court costsin the amount of $110 from the Defendant, Peter John Harris (hereafter also referred to as “Harris”). In accordance with Rules 4(1) and21(1)(

b) of the Small Claims Rules, NLR 52/97, the Statement of Claim was served on the Defendant by mail and the appropriate signedacknowledgement of service was obtained and filed with the Court. (See: Certificate of Service dated February 6, 2013, and signed byone Rita Legge.) [2] No Reply having been filed, the Local Service District applied for a default judgment and on May 6, 2013, judgment was entered forthe Plaintiff in the amount of $650 together with court costs of $120 for a total of $770. [3] In an effort to collect on its outstanding judgment, the Local Service District sought a summons to a Payment Hearing to compel theattendance of the Defendant at Court on October 10, 2013.

It was when the Defendant appeared on that date that he first made hisobjection to the default judgment known to the Plaintiff and the Court. The Application to Set Aside: [4] Harris filed his application to set aside the default judgment shortly after that court appearance. His affidavit in support of theapplication, dated November 25, 2013, arrived later.

The application, in the meantime, was set for a hearing so as to permit the parties afurther opportunity to seek legal advice if they wished to do so and to determine if it would be necessary for either or both to callwitnesses to give evidence on their behalf. When the matter was next called, both the Plaintiff and the Defendant indicated that they hadno further evidence to proffer and the matter was adjourned for decision. Statutory requirements: [5] Rule 20 of the Small Claims Rules, NLR 52/97 provides that:

(2) A judge may cancel a dismissal order or default judgment if (

a) the order or judgment was made without evidence having been taken; and (

b) the party applies under rule 19(6) and attaches to the application an affidavit containing (

i) the reason the party did not file a reply or attend the settlement conference or trial, (ii) the reason for a delay where there has been delay in filing the application, and (iii) the facts that support the claim or defence. [6] As this court has often noted when dealing with applications to set aside default judgments (see for instance: Maurice’s ServiceCenter Limited v. Ryan and Ryan 2005 NUCJ 28 , [2005] N.J. No. 28 (QL) or XXcel Designs v. Dicks [2010] N.J. No. 328

(QL)), Rule 20(2) is essentially a codification of the case law in this Province. In that regard, reference can be had to the comments ofGreen J.A., as he then was, in Langor v.

Spurrell (1997) (NL CA), 157 Nfld. & P.E.I.R. 301 (NLCA), at paragraph35 where he noted that: Three factors are generally examined by the court in determining whether to exercise its discretion to set aside a default judgment thathas been regularly obtained: the potential merits of the defence; the explanation if any, for failing to file the defence in time; and, thetimeliness of the application to set aside the judgment. [7] It must not be overlooked however, that the mere fact that the criteria have been met does not automatically guarantee that a defaultjudgment will be set aside.

Rather, it vests the judge with a discretion to do so. “This notion of judicial discretion necessarily importsthe concept of power of free decision or latitude of choice within reasonable legal parameters.” (House of Haynes (Restaurant) Limitedv. Snook, (1995) (NL CA), 134 Nfld. & P.E.I.R. 23 (NLCA), Marshall J.A. at paragraph 19.) [8] In Langor v. Spurrell, supra, at paragraph 44, Green J.A. set out what might be considered to be the ‘reasonable legal parameters’within which a judge should exercise her or his discretion to set aside a default judgment.

After noting that “…it is a precondition to setaside a default judgment that the applicant demonstrate a potentially good defence on the merits”, he went on to say that: Once a potentially good defence is shown, the defendant should then prima facie be entitled to have the judgment set aside so as to havea trial on the merits unless, considering all of the other circumstances, including the timeliness of the application and whether there is anexplanation for not filing a defence within time, and whether there will be non-compensable prejudice to the plaintiff if the judgment isset aside, and the necessity for bringing finality to disputes, the court concludes that to set aside the judgment would not be a fair exerciseof its discretion.

The evidence: [9] In his affidavit, Harris acknowledged that the Statement of Claim in the within matter did in fact arrive in the mail. As the Courtunderstands the remainder of the first paragraph of his affidavit, and as Harris in fact alluded to when appearing on the application, hedid not know that a court document could be “served” by mail.

Not realizing that he had been served and thinking that he was justdealing with another piece of mail from the Local Service District, he took no action with respect to the Statement of Claim other than tothrow it out. [10] In paragraph 2 of his affidavit, Harris says that it was not until he was ordered to go to court on October 10, 2013, that he “realizedthe nature of the document.” Unfortunately, it isn’t clear whether he is referring to the date he received the Summons to a PaymentHearing or the court date itself.

In any event, he goes on to say that he has no experience with civil matters and was unaware of hisresponsibilities. He also avers that “[I]t was not [his] intention to ignore the statement of claim.” [11] Lastly, Harris proffers as a potential defence to the claim, the following: The services that I am being taxed for, I am not getting.

This has been an ongoing matter for a number of years and I have voiced myconcerns with others to the town about not getting the services they want us to pay for.” Analysis and discussion: [12] Based on the foregoing review of the history of the proceeding, the statutory provisions and the evidence of the Defendant, I amsatisfied that the requirements of Rule 20 have been complied with in that: • the default judgment was entered without evidence being taken • the Defendant has proffered an explanation for his failure to file a reply within the required time • this application to set aside the default judgment was filed in a timely manner once the Defendant learned of the default judgment,and • the basis of the defence which the Defendant plans to pursue has been disclosed. [13] The threshold requirement of compliance with the statutory requirements having been met, it remains for the court to determinewhether or not this is an appropriate case in which to exercise its discretion to set aside the default judgment.

In that regard, there are

only two issues arising from the statutory provisions which require further consideration; the adequacy of the explanation for not having filed a reply within the required time and, whether the defence proffered is a potentially good one. [ 14 ] There are no prescribed criteria by which a court may determine the adequacy of a defendant’s explanation for not having a reply. However, the suggestion has been made that: …the judge may wish to consider a number of factors, including:

a) the age, background and commercial sophistication of the defendant

b) whether the defendant ever previously has been a party to litigation

c) whether there is any fact from which it might be inferred that the defendant understood the need to file a reply, but knowingly chose not to or neglected to do so, and

d) whether there is any suggestion that the defendant has in any way acted in a manner which could be characterized as being contemptuous of the process of the court. ( Kleinfelder v. Stoy, [1994] B.C.J. No 2823 (BCPC) (QL) , Stansfield PCJ at paragraph 35.) [ 15 ] Here, there is no information with respect to the Defendant’s personal characteristics such as his age or his background. What he has said is that he has no experience with civil proceedings and did not understand that he could be “served” with court documents by mail.

He sincerely believed that he was simply throwing away a piece of mail from the Plaintiff. As irresponsible as that may appear, it is merely a reflection of his poor relationship with the Plaintiff and is in no way indicative of any disrespect for the court or its procedures.

Therefore, the failure to file the reply, in and of itself, would not constitute a sufficient ground for the court to refuse to exercise its discretion to set aside the default judgment. [ 16 ] The real issue in this application is with respect to the defence which the Defendant says he wishes to present at trial should the default judgment be set aside. Once again, there are no prescribed standards by which the court must assess the facts set forth in describing this proposed defence.

In fact, courts have used a variety of different descriptors in an effort to explain the required standard for a proposed defence. For instance, in Langor v. Spurrell , supra, at paragraph 12 , reference is made to “a potentially good defence on the merits.” In Bank of Nova Scotia v. Pryor, [2002] N.J. No. 5 (NLPC) (QL) at paragraph 8 , Judge Hyslop referred to “a triable issue to litigate.” And, in Kleinfelder v. Stoy, supra, at paragraph 28, Judge Stansfield speaks of a “defence worthy of investigation.” [ 17 ] Harris’ description of his proposed defence is somewhat vague.

Before disregarding it however, the court must be cognizant of the fact that he has not had any prior experience with civil litigation, is self-represented and cannot be expected to be familiar with the jargon used by those with legal training and which is easily understood by the court. He, for example, refers to the Plaintiff as “the town” which is somewhat of a misnomer as the Plaintiff is properly called a “Local Service District,” created and operating under

Part XIII of the Municipalities Act, 1999, SNL1999 cM-24. In fact,

section 389 of the Act confirms that a Local Service District such as the Plaintiff herein is not a municipality. [ 18 ] Likewise, Harris refers to the fees which the Plaintiff is attempting to collect as “taxes.” They are not. Of particular interest here is

section 401of the Municipalities Act which empowers a Local Service District to charge a fee for “the cost of services or supply… to the residents of the local service district or to the users of the service or supply.” The Defendant’s allegation that he is being charged for services which he does not receive may or may not be relevant and may or may not constitute a defence depending upon which of the permissible bases for imposition of the fee is being utilized by the Plaintiff.

It would, however, appear to constitute at least an issue that is “worthy of investigation” such that the court should exercise its discretion to set aside the default judgment and allow the matter to proceed to a trial. [ 19 ] The Court is not unsympathetic to the plight of a plaintiff who, after following all of the required steps to obtain a judgment, finds itself right back at step one through no fault of its own. For that reason, before concluding that a judgment should be set aside, the court also examines the potential for any non-compensable prejudice to a plaintiff.

In this case, the Local Service District has been inconvenienced by the Defendant’s actions and has incurred not only the expense of entering the default judgment but also the cost of having its staff and/or representatives make further appearances at court. There is no prejudice to the Plaintiff’s cause of action; the remedy in such a situation is an order for costs. If there are, in fact, others who are also intentionally withholding payment of their fees, as was suggested by the Defendant, then the Plaintiff, if successful at trial, will benefit from having a court ruling to support its actions.

Conclusion: [ 20 ] In light of the foregoing, I have come to the conclusion that it would not be an unfair exercise of the court’s discretion to set aside the default judgment in this matter on the following conditions: 1. the Defendant shall file his reply not later than 4:00 p.m. on November 17, 2014 and forthwith serve a copy on the Plaintiff, 2. the Defendant shall repay the Plaintiff’s costs of entering and serving the default judgment (if any) together with costs in the amount

of $150 not later than 4:00 p.m. on November 28, 2014, and, 3. in the event of non-compliance with either of the foregoing requirements by the Defendant, the default judgment shall be reinstated forthwith and the additional costs referred to in the previous paragraph shall be added thereto. Order accordingly.