2013 ONSC 1923, 2013 ONSC 1923

CITATION : Nychuk Lumber Limited v.

Richard Guy Carlson and Ryan Carlson, 2013 ONSC 1923 COURT FILE NO.: 5481/12 DATE: 20130403 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) NYCHUK LUMBER LIMITED ) ) ) David Gorman, for the Plaintiff ) Plaintiff ) ) - and - ) ) ) RICHARD GUY CARLSON and RYAN CARLSON ) ) ) Raymond Warman, for the Defendants ) Defendants ) ) ) ) HEARD: March 25, 2013 D E C I S I O N WILCOX, J. [ 1 ] INTRODUCTION [ 2 ] The Defendant, Richard Guy Carlson, brought a motion: 1) seeking to remove him as a party, and 2) seeking to have the Notice of Default set aside. [ 3 ] Counsel for Richard Guy Carlson stated that the Defendant Ryan Carlson could not be found in order to serve him with the

motion materials. [4] Request for relief number one was not dealt with on this occasion. Defence counsel said that, to do so, he required sometranscripts and disclosure from a criminal matter. That matter is deferred to a date to be scheduled through the Trial Coordinator. [5] We proceeded to deal with request for relief number two.

For the reasons that follow, the Notice of Default is set aside. [6] FACTS [7] Some relevant facts may be usefully set out in chronological order as follows: 1- Richard Guy Carlson was served with the Statement of Claim in this matter on November 7, 2012. 2- Richard Guy Carlson served a Notice of Intent to Defend on or about November 16, 2012. 3- The Defendants were noted in default on December 19, 2012. 4- Richard Guy Carlson retained counsel, Mr. Ray Warman, on January 16, 2013. 5- Mr.

Warman’s letter of January 28, 2013 was faxed to the Plaintiff’s counsel, requesting that the noting of default be setaside. 6- Plaintiff’s counsel’s letter of January 31, 2013 refused that request. 7- Default judgment was signed on February 4, 2013. 8- Plaintiff’s counsel’s letter of February 13, 2013 to defence counsel advised that default judgment had been obtained. [8] On consent, defence counsel filed three letters which were marked as Composite Exhibit 1.

These were the letters of January28, January 31 and February 13, 2013, mentioned above. [9] REQUEST TO SET ASIDE THE NOTICE OF DEFAULT [10] Defence counsel noted that he was seeking to have the Noting of Default set aside, not the Default Judgment, at this time. [11] The grounds given were: 1) Rule 37.14(1)(c) 2) Rule 37.02(3)(c)(iv) or (v) 3) Any other grounds the court deems necessary. [12] Ground number 2 does not assist us because it requires the consent of the parties, which is lacking. [13] RULES [14] Rule 19 of the Rules of Civil Procedure deals with default proceedings.

Rule 19.03(1) provides that the Noting of Default maybe set aside on such terms as are just. [15] Rule 37.14 allows a party to move to set aside orders obtained in the circumstances listed therein, including the order of aregistrar. [16] LAW [17] Defence counsel filed the case of A.J.B. v. S.J.D. [2013] O.J. No. 1001, a decision of D. A. Broad J., of the Ontario SuperiorCourt of Justice. Regarding Rule 19, the case states: 14. The starting point is Rule 19 of the Rules of Civil Procedure which simply provides that the noting in default of a defendant may beset aside by the court on such terms as are just. 15.

The factors to be considered by the court in the exercise of its discretion were usefully summarized by Justice Koke in the recent caseof Turner’s Garage v. Schell [2011] O.J. No. 5759 (S.C.J.) as follows, at para. 30:

a) whether there is believable evidence that the defendant had an intention to defend in the time permitted for responding to a statementof claim or counterclaim;

b) whether there is evidence from the defendant explaining what prevented the defendant from responding to the statement of claim in atimely fashion

c) whether the motion has been brought with reasonable dispatch; and

d) whether there is any prejudice that would be caused to the party relying upon the noting in default caused by setting it aside. 16. Justice Koke went on to confirm, citing the cases of Metropolitan Toronto Condominium Corp. No. 706 v. Bardmore DevelopmentsLtd. (1991), (ON CA), 3 O.R. (3d) 278 (Ont. C.A.), at para. 1, and Nobosoft Corp. v. No Borders Inc. (2007), 2007

ONCA 444 , 225 O.A.C. 36 (Ont. C.A.); 43 C.P.C. (6th) 36 at paras. 3 & 7, that the Court is to consider ‘the full context andfactual matrix” and factors such as the behaviour of the parties, the length of the defendant’s delay in seeking to respond to the claim, thereasons for the delay and the complexity and value of the claim. 17. Ordinarily, on a motion to set aside a noting in default, as contrasted with a motion to set aside a default judgment, a defendant is notrequired to provide evidence as to the merits of any potential defence, except in “exceptional circumstances” (see Benelo v. Barzakay,[2003] O.J.

No. 602 (Div. Ct.), at para. 22, and Metropolitan Toronto Condominium Corporation No. 706 v. Bardmore Development Ltd. (ON CA), [1991] O.J. No. 717 (C.A.) at paras. 6-7). [18] SUBMISSIONS [19] The Plaintiff’s counsel submitted that Rule 19 does not apply. With respect, the argument in support of this contention was notclear and convincing to the court. In any event, after reading the rule, I find that it does apply. This is so even though it was not pleadedexplicitly in the Defendant’s Notice of Motion.

At the least, it can be considered under the catch-all ground number three stated in theNotice of Motion. [20] I now turn to the factors set out in A.J.B. v. S.J.D. [21]

A) WHETHER THERE IS BELIEVABLE EVIDENCE THAT THE DEFENDANT HAD AN INTENTION TO DEFEND INTHE TIME PERMITTED FOR RESPONSDING TO A STATEMENT OF CLAIM OR COUNTERCLAIM [22] Uncontroverted evidence on point comes from Richard Guy Carlson’s affidavit of February 12, 2013 filed with the Notice ofMotion. [23] After being served on November 7, 2012 with the Statement of Claim, he filed the Notice of Intent to Defend on November 16,2012. He deposes in his affidavit as to criminal charges stemming from incidents that the civil matter also arises from, which chargeswere withdrawn as against him.

Therefore, he says, he had no involvement in the incidents and no liability for them, which the Plaintiffknew. [24] In the circumstances, I have no difficulty finding that Richard Guy Carlson had the intent to defend the claim which was for over$100,000. [25]

B) WHETHER THERE IS EVIDENCE FROM THE DEFENDANT EXPLAINING WHAT PREVENTED THE DEFENDANTFROM RESPONDING TO THE STATEMENT OF CLAIM IN A TIMELY FASHION [26] Richard Guy Carlson states in his Affidavit that he had difficulties retaining a lawyer. Unfortunately, he does not explain why. Having served a Notice of Intent to Defend, he had until about December 7, 2012 under the rules to serve a Statement of Defence. Hewas noted in default on December 19, 2012. He retained counsel on January 16, 2013. Although it would have been preferable to havemore detail as to why he could not retain counsel sooner, I find that the delay is not inordinate, especially with the Christmas seasonintervening. [27]

C) WHETHER THE MOTION HAS BEEN BROUGHT WITH REASONABLE DISPATCH [28] Having been retained on January 16, defence counsel’s letter to Plaintiff’s counsel requesting that the Notice of Default be setaside was met with a letter of refusal dated January 31. Richard Guy Carlson’s affidavit was sworn in the City of Greater Sudbury onFebruary 12, 2013. It indicates that he lives in the Town of Garson, which is in the Sudbury area, and an inconvenient distance from thisjurisdiction and defence counsel’s office. The Notice of Motion itself is dated February 19, 2013 and was scheduled for March 25, 2013,when it was heard. I find that it was, in the circumstances, brought with reasonable dispatch. [29]

D) WHETHER THERE IS ANY PREJUDICE THAT WOULD BE CAUSED TO THE PARTY RELYING UPON THENOTING IN DEFAULT CAUSED BY SETTING IT ASIDE [30] Plaintiff’s counsel submitted that the Plaintiff had suffered severe economic losses from damage to its equipment that is the basisfor this case, which continues as the case drags on. However, there was no evidence provided regarding this. Paragraph 39 of the A.J.B.v. S.J.D. is relevant here: Prejudice 39. The plaintiff argues that she will be prejudiced if the notings in default are set aside, by losing an opportunity to secure anexpeditious judgment.

In my view, a delay in the plaintiff’s ability to proceed to judgment, by permitting the defendant to defend theaction, does not constitute prejudice. There must ordinarily be some adverse change in the plaintiff’s legal or practical position in theintervening period between when the action should have been defended and when the motion is brought, to support the existence ofprejudice.

An example is where a key witness is no longer available to testify by reason of death of disability, or other key evidence foruse at the trial is no longer available. … There is no evidence of prejudice of these or any sorts. [31] GENERAL COMMENTS [32] Inherent in this case is the notion of courtesy in legal dealings. Defence counsel made it clear that there was no allegation ofsharp practice being made against the Plaintiff’s counsel. Nevertheless, there were missed opportunities to exhibit courtesy, which, inthe long run, might have actually expedited the resolution of the matter and reduced its cost.

One such opportunity was before the notingof default. It would not have been difficult for the Plaintiff’s counsel to place a telephone call to the defendants to ascertain theirintentions and perhaps set some

schedule for the matter. Similarly, knowing that the Defendants had used defense counsel’s services in a

related matter, a telephone call could have been placed to him. Of course, the Defendants could have contacted the Plaintiff’s counsel’s office seeking more time, also. Another opportunity came later, once defence counsel had been retained and had faxed the letter of January 28 to Plaintiff’s counsel requesting that the Notice of Default be set aside. This might have been agreed to, perhaps in return for payment of costs thrown away. Instead, default judgment was obtained soon thereafter. There is always pressure to produce for clients, but it should not be at the expense of some professional courtesy.

Clients come and go, but a lawyer is dealing with his or her colleagues for a long time, especially in a jurisdiction such as this with a small local bar. Professional courtesy is of particular importance in those circumstances. [ 33 ] COSTS [ 34 ] Although the Defendant was the successful party in this instance, in view of the costs thrown away in default proceedings as a result of the Defendants not defending in time, each side shall bear its own costs. ___________________________ Justice James A. S. Wilcox Released: April 3, 2013