Amirault v. Saturley, 2022 NSSC 332

SUPREME COURT OF Nova Scotia Citation: Amirault v.

Saturley , 2022 NSSC 332 Date: 20221115 Docket: Hfx No. 500438 Registry: Halifax Between: John Amirault, France Amirault, Shauna Anthony, Kim Arnold, Wilfred Arnold, Marla Cameron, RSC Investments Ltd., Richard Cameron, 3067556 Nova Scotia Ltd., Ashco Holdings Ltd., Sonia Chehil, Sonia Chehil in her capacity as the executor of The Estate of Dilip Chehil, Mary Cooke, Stephen Cooke, Crooks Investments Limited, Joanne Deal, Bernard Deal, Lindsay Deal, Christopher Deal, Ann Duffy, John Duffy, 2338987 Ontario Inc., Archie Gillis, Patricia Gillis, Lori Nickerson Graydon, John Graydon, Norman Greenburg, Paul Heighton, Mary Heighton, Vincent Heighton, Florence Heighton, Claude Hicks, Teresa Hicks, Richard Kent, Patricia Kent, Janet Khattar, Michael Killorn, Doug Legge, Daphne Legge, Trevor Long, Joanne Long, Donald MacAulay, Margaret MacAulay, Bob MacDonald, Eileen MacDonald, Joy Moore, Scott Moore, Heather Moss, Lorraine Mulrooney, Earl Munroe, Violet Munroe, Ronald Munroe, Doreen Munroe, Fred Myatt, James O’Keefe, Joyce O’Keefe, David Parsons, Greg Rhyno, Wanda Rhyno, Contrast Home Holdings Inc., Jean-Guy Richard, Lynn Richard, Heather Richmond, Paul Richmond, Riley Richmond, Heather Stewart, Jim Stewart, Brian Sutherland, Elizabeth Huyter, Snowcreek Building Design Solutions Inc., Belinda Swanson, Lary Trites, Kathleen Trites, Richard Trites, Bonnie Trites-Beal, Andrew Robie Trites, Canadian Buckwheat Corporation, Robert Vair, Pamela Vair and Guenter Wiedekamp Plaintiffs and Frederick Saturley, Adrian Saturley, Mary Lyn Saturley, High Tide Wealth Management, National Bank Financial Inc/Financiere Banque Nationale Inc c.o.b.

National Bank Financial Network Defendants DECISION Judge: Heard: The Honourable Justice Glen G. McDougall April 12, 2022, in Halifax, Nova Scotia Written: Counsel: November 15, 2022 Eugene Tan and Heather Mills, for the Plaintiffs Christopher I. Robinson, for the Defendants – Frederick Saturley, Adrian Saturley, Mary Lyn Saturley, and High Tide Wealth Management William L. Mahody, K.C., and Christine Murray, for the Defendant – National Bank Financial Inc/Financiere Banque Nationale Inc C.O.B.

National Bank Financial Network By the Court: Introduction [ 1 ] A motion to set aside a default judgment granted to the Plaintiffs by the Prothonotary on July 5, 2021, was brought on behalf of several of the Defendants, namely Frederick Saturley, Adrian Saturley, Mary Lyn Saturley, and High Tide Wealth Management (the “Saturley” Defendants).

[ 2 ] The Defendant – National Bank Financial Inc/Financiere Banque Nationale Inc (c.o.b. National Bank Financial Network), (“National Bank Financial”) did not actively participate in the hearing of the motion. Counsel for National Bank Financial indicated, in correspondence filed prior to the hearing, that his “client takes no position regarding that motion.” He further indicated that he planned “to attend the hearing.” Procedural Background [ 3 ] In order to provide context, a review of the events that followed the filing of the Notice of Action and Statement of Claim on September 14, 2020, is required.

Initially, a total of 52 individual and corporate Plaintiffs were named in the proceeding. The number of Plaintiffs was increased to 80 in an Amended Notice of Action and Statement of Claim filed on February 23, 2021. Prior to filing the amended pleadings, counsel for the Plaintiffs and counsel for the Saturley Defendants discussed holding off the filing of a defence until the Amended Notice of Action and Statement of Claim was completed and filed. [ 4 ] Before the amended documents were filed, counsel for the Saturley Defendants filed a Motion for

Summary Judgment on the Pleadings seeking to have the claims against one of the Saturley Defendants – Mary Lyn Saturley – dismissed. Although a date and time for the hearing of this motion was set for January 28, 2021, it was later adjourned without day. That motion has not been pursued. [ 5 ] A Notice of New Counsel was filed on behalf of the Plaintiffs on January 15, 2021. According to the Saturley Defendants’ counsel, he first became aware of this on January 27, 2021.

Between the time when the Amended Notice of Action and Statement of Claim was filed on February 23, 2021, and the date that default judgment against the Saturley Defendants only was obtained on July 5, 2021, there were numerous email exchanges between counsel regarding the filing of a defence on behalf of the Saturley Defendants and the other Defendants, National Bank Financial. [ 6 ] As just noted, default judgment was obtained against the Saturley Defendants only.

Counsel for the Plaintiffs did not seek a similar remedy against National Bank Financial, despite the fact that a defence had not been filed by its then-counsel, Mr. Thurlow of the law firm, Cox & Palmer. A Notice of Defence with Crossclaim was filed on behalf of National Bank Financial by its new counsel on December 8, 2021. Counsel for the Plaintiffs apparently was prepared to extend the time for filing National Bank Financial’s defence even beyond the final deadline imposed on the Saturley Defendants.

His reasons for doing so are of no consequence to the determination of the issue that is now before me. [ 7 ] What is relevant are the numerous email exchanges that occurred between counsel for the Plaintiffs and counsel for the Saturley Defendants after the Amended Notice of Action and Statement of Claim were filed on February 23, 2021, and July 5, 2021, when counsel for the Plaintiffs applied for default judgment. [ 8 ] Counsel for the Plaintiffs inquired of counsel for the Saturley Defendants on March 25, 2021, for some indication of when a defence might be filed. He was advised by Mr.

Robinson on March 29, 2021, that “I anticipate filing my client’s defence during either the week of May 3 rd or 10 th .” That self-imposed deadline came and went without the defence having been filed. [ 9 ] Counsel for the Plaintiffs, again, contacted Mr. Robinson on June 4, 2021. Mr. Tan was a little more demanding on this occasion. He stated in his email “Either file the motions or defence by June 11, or I will file for default.” In his reply to Mr. Tan, sent on June 4, 2021, Mr.

Robinson stated: Sorry Eugene, but I have a hearing next week, and then a 4-day trial the week after, both of which involve considerable preparation, therefore I have insufficient time. As per Harry’s advice earlier, either the Motions or the defences will be filed before month’s end. Thank you. [ 10 ] Nothing further occurred until June 30, 2021, when Mr. Tan, once again, emailed counsel for the Saturley Defendants and National Bank Financial. The full text of this email is as follows: Good afternoon Counsel, In relation to the defences, the last estimate that I had was the end of June, which is now upon us.

I am not able to hold off our clients any further and have been given instruction from them. As a result, I am prepared to extend the deadline for filing defences to 2:00 PM on Monday, July 5, 2021 , unless some reasonable agreement can be arranged on the contrary. While I have been loathe to take this step, our clients are not prepared to accept any further delay. Following that time, I have been instructed to file for default judgement. While I am fully cognizant of the potential outcome of such action, and have advised our clients accordingly, I am bound to follow my clients’ directions at this point.

Eugene Tan, Walker Dunlop [ 11 ] Prior to receiving this email, Mr. Robinson had indicated to Mr. Tan that he was considering a motion “1) … for severance under Rule 37 to have this proceeding split into multiple actions; and 2) whether to file an [sic] SJ Motion on behalf of Mrs. Saturley.” This email is dated May 17, 2021. In it, Mr. Robinson also added: …, I don’t seen [sic] to have a Court stamped copy of your amended pleading – could you provide one pls.” [ 12 ] Regardless of whether Mr.

Tan had provided a court-stamped copy of the Amended Notice of Action and Statement of Claim he, for certain, had provided counsel for the Saturley Defendants a copy of the amended pleadings on February 19, 2021. It was attached to an email, a copy of which was attached to the affidavit of Mr. Tan filed in support of his clients’ motion to obtain default judgment on July 5, 2021. [ 13 ] Clearly, Mr. Tan’s patience, and that of his clients’, had run out. This was made abundantly clear in his June 30, 2021, email to

Mr. Robinson sent at 2:01 p.m. (see para. 10, supra). Mr. Robinson was given one final deadline of “2:00 PM on Monday, July 5, 2021”to file a defence. The same deadline was given to counsel (at that time) for National Bank Financial but as indicated previously, defaultjudgment against that Defendant was not pursued despite the fact that its defence and crossclaim did not get filed until December 8,2021. There is likely a good reason why Mr. Tan did not seek a default judgment against that particular Defendant. In any event, it is notrelevant to the motion brought by Mr.

Robinson to set aside the default judgment against his clients that was granted by the Prothonotaryon July 5, 2021. [14] Mr. Robinson did attempt to file a motion for severance but not until after the 2 o’clock p.m. deadline on July 5, 2021, hadexpired. According to his affidavit (on which he was extensively cross-examined), Mr. Robinson attempted to file the Motion forSeverance late on the afternoon of July 5, 2021. Indeed, it was after Court Administration’s 4:00 p.m. deadline for accepting documentsfor filing. As such, the documents could not be filed until the following day.

Regardless of when the severance motion documents gotaccepted, it was certainly after the 2:00 p.m. deadline clearly set out in Mr. Tan’s June 30, 2021, email. Furthermore, it was not thedefence that Mr. Tan had insisted be filed. A motion for severance on the

summary judgment motion that Mr. Robinson had previouslyfiled on behalf of one of his clients and subsequently adjourned, without day, would not act as a waiver or a suspension of the 15-daytime period for filing a defence as set out in Civil Procedure Rule 31.12(1)(a):

(1) A defendant or third party who wishes to defend an action or third party claim must file a notice of defence, and a defendant orthird party who does not wish to defend but wishes to remain entitled to notice must file a demand for notice, no more than the followingnumber of days after the day the defendant or third party is notified of the proceeding: (

a) fifteen days, if notification is by personal service in Nova Scotia or by other means completed entirely in Nova Scotia; … [15] If a Demand for Particulars had been served on opposing counsel this would suspend the deadline for filing a defence untilsuch time as further particulars were provided. BUT, that is not what Mr. Robinson did. He could not simply ignore the deadline imposedon him by Mr. Tan and, instead, pursue a course of action that did nothing to excuse his failure to abide by the Rules.

His clients wereplaced in an extremely compromised position and despite the cooperation and willingness of Plaintiffs’ counsel to extend the normalfiling deadline, he still failed to do what the Rules required him to do. Instead, he embarked on a completely new tactic to try to separatethe action brought on behalf of a combined 80 individual and corporate Plaintiffs which, if successful, would require each Plaintiff to filehis/her/their own individual action. I need not comment on the chances of that being successful. For now, it remains dormant havingbeen returned to Mr.

Robinson by Court Administration after Mr. Tan alerted the Law Courts’ staff that he had already obtained defaultjudgment. [16] The motion to set aside default judgment was filed on behalf of the Saturley Defendants on August 6, 2021. The hearing of thismotion got under way on March 29, 2022. It required additional time to complete and so had to be continued to April 12, 2022. The Law/Analysis [17] Civil Procedure Rule 8.09 states: 8.09 Setting aside default judgment A judge may set aside a default judgment issued by the prothonotary or made on an ex parte motion by a judge. [18] In the decision Vaughan v.

Green, 2019 NSSC 331; [2019] N.S.J. No. 469, the Honourable Justice James L. Chipman of thisCourt wrote this at paras. 12, 13, and 14 of his decision: GOVERNING LAW ANALYSIS 12 Both parties agree Rule 8.09 governs this application; it reads: Setting aside default judgment 8.09 A judge may set aside a default judgment issued by the prothonotary or made on an ex parte motion by a judge. 13 Rule 8.10 goes on to note that it is considered an abuse of process to obtain a default judgment without providing "reasonablewarning" to another party.

Both parties have cited the most recent authority from our Court concerning Rule 8.09, J.W. Bird andCompany Limited v. Allcrete Restoration Limited, 2019 NSSC 311. At paras. 22 and 23 Justice Brothers sets out the test on a motion toset aside default judgment as follows: 22 The test on such a motion is well established, and set forth by Justice Roscoe in Lewis-Choi Company v. Western Glove WorksLtd., (1990), (NS SC), 98 N.S.R. (2d) 282, 1990 CarswellNS 318 (S.C.T.D.), at para. 12: When the cases are all considered, I do not think there is any doubt as to what is the test to be applied in Nova Scotia.

In order to succeedon an application to set aside a default judgment, the applicant must show two things: (1) a fairly arguable defense, or a serious issue to be tried; and, (2) a reasonable excuse for the delay in filing the defence. 23 The test was further confirmed in Ross Barrett & Scott v. Simanic, (1994), 1994 NSCA 227 , 137 N.S.R. (2d) 45, 1994CarswellNS 90 (C.A.). This case also confirms that the burden in such motions is upon the moving party, here Wheaton. In order to besuccessful, Wheaton must discharge the burden of proof on each element of the Lewis-Choi test.

14 In the result, Ms. Naas must demonstrate that she has a fairly arguable defence and a reasonable excuse for the delay. [ 19 ] For a more recent decision from this Court, the Honourable Justice Peter P. Rosinski, in Pogosyam v. Wilson Fuel Co. Limited , 2021 NSSC 326 ; [2021] N.S.J.

No. 438 , stated the following at paras. 9 and 10: 9 In order to successfully argue that the Default Judgement Order should be set aside, in accordance with the criteria set out in our jurisprudence, Fairview must satisfy the court both that there is: 1. (a fairly arguable defence, or) a serious issue to be tried; and 2. a reasonable excuse for the delay in filing the Defence (and implicitly for the delay in bringing the motion to set aside the Default Judgement Order). 10 The Plaintiff conceded that the low threshold of "a fairly arguable defence, or a serious issue to be tried" has arguably been met in the circumstances. [ 20 ] It is made clear from both of these decisions that the Court has to be satisfied that (1) there is a fairly arguable defence or a serious issue to be tried, and, (2) there is a reasonable excuse for the delay in filing the defence (and implicitly for the delay in bringing the motion to set aside the Default Judgment Order). [ 21 ] In the Pogosyam case, Justice Rosinski spoke of the threshold to establish that a “fairly arguable defence, or a serious issue to be tried” exists.

I will address the two-part test as follows:

(1) Do the Saturley Defendants have a fairly arguable defence or a serious issue to be tried? [ 22 ] Putting aside for the time being, Justice Rosinski’s reference to a low threshold that must be overcome to establish this aspect of the test, it is clear from the affidavit of both Mr. Robinson and Mr. Saturley that there is very much “a fairly arguable defence” or “a serious issue to be tried.” Both Mr. Robinson and Mr. Saturley were extensively cross-examined on their affidavits. [ 23 ] Mr.

Saturley stated in his affidavit, and reiterated under cross-examination, that he and the other Saturley Defendants always intended to defend against the claims of his former clients. He referred to a similar action commenced against him and his company – High Tide Wealth Management (National Bank Financial Inc/Financiere Banque Nationale Inc is also a Defendant in this action) in which a defence has been filed on his and his company’s behalf. [ 24 ] Mr. Robinson is also counsel for Mr. Saturley and his company in that matter. The defence consists of 40 paragraphs spread over 11 pages.

I accept that in the matter that is now before me, Mr. Saturley not only intended to defend himself and his company but was also speaking on behalf of his wife and son – the other remaining Saturley Defendants – when he said it was always his intention to defend. [ 25 ] I am also satisfied that there is a fairly arguable defence as well as a serious issue to be tried. That rather lower threshold, as Justice Rosinski referred to it, has been satisfied in this case.

(2) Is there a reasonable excuse for the delay in filing the defence and, implicitly, for the delay in bringing the motion to set aside the default judgment? [ 26 ] Default judgment was obtained on July 5, 2021. Mr. Tan, on behalf of the Plaintiffs, wasted little time in filing the motion materials requesting the Prothonotary to grant the remedy. Indeed, it was done within minutes of the 2 o’clock p.m. deadline imposed on counsel for the Saturley Defendants in the email Mr. Tan sent to him at 2:01 p.m. on June 30, 2021. Counsel for the Plaintiffs should not be criticized for taking such prompt action.

He had already shown a great deal of patience in not insisting on strict compliance with the rules of procedure, particularly the 15-day period to file a defence after service has been made. [ 27 ] This taken alone does not mean that all the blame must then be placed on the shoulders of counsel for the Saturley Defendants. Certainly, the obligation to file a defence prior to the amendments to the Notice of Action and Statement of Claim which were filed on February 23, 2021, was relaxed based on discussions between counsel. Counsel for the Plaintiffs – Mr.

Ian Gray – indicated to counsel for the Defendants that the filing of a defence(

s) should await the contemplated amendments to the originating documents. [ 28 ] After new counsel took over carriage of the Plaintiffs’ file, there were a number of exchanges between counsel regarding the filing of a defence. Mr. Tan indicated on one occasion that he was not insisting on strict compliance with the normal filing deadline. On a number of occasions between the time when the amended pleadings were filed and the date on which default judgment was requested, Mr. Tan allowed counsel for the Saturley Defendants to suggest a date by which he hoped to either file a defence or bring a motion for severance.

After several of these suggested filing deadlines passed without any action being taken by Mr. Robinson, Mr. Tan had had enough. That led to him sending the June 30, 2021 email in which he indicated that he could no longer hold off his clients. His email contained the following sentence: As a result, I am prepared to extend the deadline for filing defences to 2:00 PM on Monday, July 5, 2021 , [underlined in email] unless some reasonable agreement can be arranged on the contrary. [My underlining.] (Emphasis added) [ 29 ] It would appear that Mr.

Tan, despite having been pushed to his, and no doubt, his clients’ limit, was still willing to discuss a further extension. As things played out, Mr. Robinson did not pursue the possibility of getting even more time to file a defence on behalf of his clients or to file a motion for severance, which he thought would lead to a suspension of the obligation to file a defence. Mr.

Robinson did, however, attempt to meet the deadline of July 5, 2021, as set out in Mr. Tan’s email. He caused to be delivered to Court Administration motion documents seeking an order to sever “the Plaintiffs from the action as parties, such that each of them shall be required to commence independent actions.” (See Ex. P to the Affidavit of Chris Robinson sworn to, and filed, on March 7, 2022.). Not only did Mr. Robinson fail to meet the 2:00 p.m. deadline set by Mr. Tan, he also presented his motion documents to Court Administration too late in the afternoon to be accepted that day for filing.

Anything presented to Court Administration for filing must be received no later than 4:00 p.m. if they are to be date-stamped that day. Otherwise, they will bear the following day’s date-stamp. [ 30 ] It might be a case of “too little, too late” but, nonetheless, Mr. Robinson did attempt to meet the deadline. And, as mentioned previously, the motion to set aside the default judgment was filed on August 6, 2021. A considerable amount of materials by way of affidavits and a brief had to be prepared. As such, this motion was turned around relatively quickly. It was not left to languish after it became clear to Mr.

Robinson that the Plaintiffs were not prepared to set the default judgment aside willingly. In Pogosyam , Justice Rosinski, at para. 34 stated this: 34 I also bear in mind "the gravity of the consequences" of not setting aside a Default Judgment -- see Justice Bateman's reasons in Royal Canadian Legion v Norman , 1996 NSCA 224 . There ought to be a proportionality between the level and nature of unreasonableness of the excuse(

s) for the delay(s), and the judicial response. (Emphasis added) [ 31 ] I agree with what Justice Bateman had to say in the Norman v. Royal Canadian Legion case, which was adopted by Justice Rosinski in his decision. The prejudice to the Saturley Defendants, should the default judgment not be set aside, is enormous. They would face the possibility of having very significant damages assessed against them. I previously indicated that I accept the fact that the Saturley Defendants had every intention of defending themselves against the claims of the Plaintiffs.

And despite their counsel’s failure to respond in a timely fashion to the requirement of filing a defence on their behalf, I am satisfied that he, at least, attempted to meet the deadline that was imposed on him to do so. Choosing to file a severance motion instead of a defence might not have accomplished what Mr. Robinson thought it would but it was, at least, an attempt to protect his clients’ best interests. Conclusion [ 32 ] I am satisfied that the Saturley Defendants have a fairly arguable defence and there exists a reasonable excuse for the failure to file a defence. The default judgment shall be set aside.

The Saturley Defendants shall have 15 days from the date of this decision to file a defence. The 15-day period is to be calculated in the manner provided for in the Rules. Counsel for the Saturley Defendants shall also prepare the order setting aside default judgment which has to be issued prior to the defence being filed. [ 33 ] I would ask Mr. Tan to seek instructions from his clients to accept service of the defence on their behalf. Otherwise, the Saturley Defendants will be forced to incur considerable expense in serving each Plaintiff separately.

I hope that this can be avoided. [ 34 ] I will leave it to the parties to attempt to reach an agreement on costs. They should bear in mind that despite the success of the Saturley Defendants in obtaining the relief sought, this situation could have been avoided if counsel for the Saturley Defendants had only done what he should have done. As such, costs will be awarded to the Plaintiffs. It is up to counsel to try to reach an agreement on quantum; failing which they may present their arguments to me in writing within 30 calendar days of the date of this decision. McDougall, J.