Court Corrects Breach of Natural Justice
April 4, 2017
In 2289878 Ontario v Gourmet Gringos, Justice Kristjanson set aside Master Haberman’s January 12, 2016 Order striking the defendants (the “Defendants”) statements of defence[1] and dismissing the counterclaim as a result of several breaches of procedural orders. The procedural breaches included the Defendants’ failure to prepare an affidavit of documents in compliance with the Rules of Civil Procedure (the “Rules“) and non-compliance with a Court ordered discovery plan. The Defendants also failed to pay cost awards in a timely manner.
On January 12, 2016, the Defendants’ lawyer arrived approximately 45 minutes late to the motion due to poor weather conditions. Nevertheless, Master Haberman refused to hear submissions ruling that she had already made her decision striking the defences and dismissing the counterclaim (the “Order”).
Shortly thereafter, the Defendants canvassed dates with Plaintiff’s counsel for a motion to set aside the Order on the grounds that the Defendants’ lawyer failed to appear on the motion through “accident” and by “mistake” in accordance with Rule 37.14(2) of the Rules. Pursuant to Rule 37.14(2), the Court has broad discretion to set aside or vary the Order on such terms as are just.
While a hearing date was being scheduled between counsel, the Plaintiff’s lawyer, without notice, requisitioned default judgment, obtained default judgment and filed writs of seizure and sale against the Defendants. The Defendants discovered the default proceedings by searching the court file during the course of preparing motion materials and promptly moved to set aside the Order and all default proceedings.
Following the Court of Appeal’s decision in Male,[2] Justice Kristjanson set aside the noting in default, default judgment, and writs of seizure and sale “without inquiry into the merits” of the litigation. In analogous circumstances to Male, it was “unreasonable for counsel for the respondent (Plaintiff) to have noted the appellants in default and to have pursued default judgement without notice to appellants’ counsel, with whom he was actively engaged and knew the appellants were defending the litigation. The Court found that Plaintiff counsel’s conduct was “unacceptable” and breached the Rules of Civility.
In this case, the Court set aside the Order on the grounds that the Defendants’ lawyer had filed uncontested evidence that he arrived late at the motion because of an accident or mistake due to poor weather, and because it was a breach of natural justice to strike the defences and dismiss the counterclaim without the opportunity to be heard. The Court also found that there was no prejudice to the Plaintiff to set aside the Order and the Defendants would be irrevocably prejudiced if the Order was not set aside. Lastly, there was an air of reality to the defence which militated in favour of the Court exercising its discretion to set aside the Order.
The Court found the Defendants should not suffer the irrevocable loss of the right to proceed with the lawsuit by reason of their lawyer’s inadvertence and noted that, where possible, the Court strives to resolve litigation on its merits.
In light of the Plaintiff’s inappropriate conduct initiating default proceedings without notifying the Defendants while they were actively defending the lawsuit, the Court ordered the Plaintiff to pay costs of the motion in the amount of $15,000.00.
2289878 Ontario v Gourmet Gringos, 2016 ONSC 6204 (CanLII)
[1] The defined term Defendants does not include the defendant, Leonidas Karabelas
[2] Male v. Business Solutions Group, 2013 ONCA 382 (CanLII)
