Tatum v JS Martell Enterprises Inc., 2021 SKCA 25

Court of Appeal for Saskatchewan Docket: CACV3704 Citation: Tatum v JS Martell Enterprises Inc., 2021 SKCA 25Date: 2021-02-17 Between:Sean TatumAppellant(Defendant)AndJS Martell Enterprises Inc.Respondent(Plaintiff)Before: Caldwell, Schwann and Leurer JJ.A.Disposition: Appeal dismissed orallyWritten reasons by: The Court On appeal from: QBG 1625 of 2009, SaskatoonAppeal heard: February 9, 2021Counsel: Elke Churchman for the Appellant Adam Touet and John Mansbridge for the Respondent The Court [1] What follows are the Court’s reasons for dismissing this appeal at the close of the hearing. [2] Sean Tatum [Appellant] appealed against a Court of Queen’s Bench Chambers fiat dated August 26, 2020 [Fiat], under whicha Chambers judge had dismissed his application to set aside a default judgment dated March 30, 2010 [Default Judgment].

The Chambersjudge had also allowed an application by JS Martell Enterprises Inc. [Respondent] to renew the Default Judgment for an additional tenyears and awarded costs to the Respondent in both applications. [3] The background to the two applications is as follows. In September of 2008, the Appellant leased real property from theRespondent. That same month, the Appellant separately agreed to purchase the leased property once he had paid two years of rent. Itseems the Appellant had stopped paying rent by April of 2009, thereby allegedly breaching both agreements.

The Respondent sued himfor non-payment of rent, but the Appellant did not defend the action, which led to the Default Judgment. The Respondent took no actionduring the next ten years to enforce the Default Judgment. During this time, the two directing minds of the Respondent corporation[Principals] died. In February of 2020, the Respondent, now controlled by the Principals’ son [President], brought an application to havethe Default Judgment renewed. In response, the Appellant applied to set aside the Default Judgment pursuant to Rule 10-13 of TheQueen’s Bench Rules.

In support of his application, the Appellant averred that he had not attended to the Respondent’s claim due to hisOxycodone addiction. He did not aver, however, that he had been unaware of that claim, the importance of it, or what defending against itrequired.

Further, he acknowledged that he had become aware of the Default Judgment three months after it was taken out in 2010. [4] The Chambers judge dismissed the Appellant’s application because he had failed to satisfy steps two and four of the four-parttest set out in Brent Gedak Welding Ltd. v Maverick Oilfield Services Ltd., 2019 SKQB 243 at para 45, 4 CLR (5th) 149, which theChambers judge stated applied in an application to set aside a default judgment. As to the second step, the Chambers judge found theAppellant had failed provide a satisfactory explanation for failing to deal with the Respondent’s claim.

With respect to the fourth step, hefound that, with the deaths of the Principals, the Respondent “would suffer serious prejudice if the judgment were set aside”, being the“complete inability to adduce evidence (which would have been available in previous years) to respond to the defences proposed to beraised by the [Appellant]” (at para 17). [5] The decision of the Chambers judge not to open up the Default Judgment results from an exercise of judicial discretion(Ballentyne v Benard, 2012 SKCA 23 at para 5, 385 Sask R 280).

A deferential standard of appellate review is applied to an exercise ofjudicial discretion (Friends of the Oldman River Society v Canada (Minister of Transport), (SCC), [1992] 1 SCR 3[Oldman River]; Rimmer v Adshead, 2002 SKCA 12 at para 58, [2002] 4 WWR 119; and Kot v Kot, 2021 SKCA 4 at paras 15–19). Tosatisfy it, an appellant must establish that the judge failed to correctly identify the criteria that govern the exercise of judicial discretion,misapplied those criteria, or failed to give any or sufficient weight to a relevant consideration.

An appellant may also satisfy the standardby establishing that the judge made a palpable and overriding error when assessing the evidence. Alternatively, an appellant may seek topersuade the Court that the result of the exercise of judicial discretion is so manifestly unjust as to require appellate intervention.

However,absent proof of such an error or of manifest unjustness, an appellate court is not entitled to substitute its own decision for that of the judgevested with the judicial discretion merely because we would have exercised it differently (Oldman River). [6] In his oral and written argument, the Appellant said this Court ought to set aside all of the orders made under the Fiat becausethe Chambers judge had made unreasonable findings that led him to an unreasonable result. There are two principal aspects to theseallegations.

On the one hand, the Appellant said the Chambers judge erred by concluding that he had not provided a satisfactoryexplanation for failing to respond to the claim. On the other, he submitted the Chambers judge erred by finding that serious prejudicewould befall the Respondent if the Default Judgment were set aside.

To succeed in this appeal, the Appellant must persuade this Courtthat both of these errors occurred. [7] As to the first alleged error, we are simply not persuaded that the Chambers judge erred in any way that could haveundermined his finding that the Appellant had failed to provide a satisfactory explanation for failing to defend against the Respondent’sclaim. In our assessment, the evidentiary record does not give much traction to the Appellant’s allegation.

While we do not read theAppellant’s evidence any differently than the Chambers judge did, we note that, even on the most favourable reading of it, the evidence

does not support the inference the Appellant asked the Chambers judge to draw. That is, the evidence does not reasonably support an inference that the Appellant was incapacitated by his Oxycodone addiction to the point that he could not deal with the statement of claim. [ 8 ] It is, however, immaterial whether the Appellant can make out the first alleged error because his appeal falters on the second, where he asserts the Chambers judge erred in his assessment of, or by giving too much weight to, the prejudice that would befall the Respondent if the Default Judgment were opened up.

Two facts were important to the Chambers judge’s conclusion in this regard. [ 9 ] First, the Principals, who died in 2018 and 2019, were the directing minds of the Respondent at the time it entered the lease and sale agreement in 2008, when it obtained and registered the Default Judgment in 2011, and throughout the intervening years up to 2019 during which the Respondent did not enforce the Default Judgment. Further, the President, who assumed the role in the fall of 2019, averred to having no direct or indirect knowledge of the circumstances that had led to the Default Judgment.

While the Appellant suggested there could be other sources of evidence that might fill the gaps in the “corporate memory” left by the deaths of the Principals, there was, as the Chambers judge observed, no evidence to support that suggestion. We see no palpable and overriding error in the Chambers judge’s assessment of the evidence in this regard. [ 10 ] Second, the defences the Appellant proposed to raise would put the Principals’ knowledge of the circumstances directly at issue.

In his draft statement of defence, the Appellant stated that he had “terminated the Lease and Purchase agreement with both the knowledge and consent of the [Respondent]” and that one of the Principals had agreed not to enforce the Default Judgment. More importantly, the Appellant claimed in his proposed statement of defence that the Respondent had “knowingly mis[led]” him about facts relevant to a fundamental term of the purchase agreement.

As the Chambers judge understood, given the deaths of the Principals, the Respondent was “not in a position to present the evidence that would be germane to these defences” (at para 12). Again, we see no palpable and overriding error in the Chambers judge’s assessment of the evidence in this respect. [ 11 ] Lastly, we take the Appellant’s assertion that the Chambers judge reached an unreasonable result as an allegation that his decision not to open up the Default Judgment is so manifestly unjust as to invite appellate intervention on that basis alone.

In this regard, the Appellant argued the Chambers judge’s decision prejudiced him because it barred him from having his “day in court”. We do not see it that way. In fact, the Default Judgment is the consequence of a squandered opportunity to have a full and fair adjudication of the issues between the parties on the basis of the law and the evidence. If the Default Judgment were opened up, it is the Respondent who would be barred from having its “day in court” because it would be unable to tender the evidence necessary to respond to the Appellant’s proposed defences.

As we see it, even if the Default Judgment were set aside, there could be no full and fair adjudication of the issues between the parties. Accordingly, we are unable to conclude the Chambers judge erred in his assessment of prejudice and we are unable to agree that his decision is unjust. [ 12 ] In short, the appeal is dismissed with $500 of fixed costs payable to the Respondent.