Re-Opening an Application

From Caselaw.Ninja


R.R.O. 1990, Reg. 194: RULES OF CIVIL PROCEDURE, Rule 38[1]

38.11 (1) A party or other person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion. R.R.O. 1990, Reg. 194, r. 38.11 (1); O. Reg. 132/04, s. 10; O. Reg. 55/12, s. 3.

(2) A motion under subrule (1) may be made,
(a) at any place, to the judge who granted the judgment;
(b) at a place determined in accordance with rule 37.03 (place of hearing of motions), to any other judge;
(c) to the Divisional Court, in the case of a judgment of that court. R.R.O. 1990, Reg. 194, r. 38.11 (2).
(3) On a motion under subrule (1), the judgment may be set aside or varied on such terms as are just. R.R.O. 1990, Reg. 194, r. 38.11 (3).

[1]

Fresh Network v. Alessandro, 2004 CanLII 30078 (ON SC)[2]

[14] The sole question raised by the motion at hand is whether the judgment is properly to be set aside against Joe because of a “mistake” within the meaning of Rule 38.11(1).

[15] It is apparent that Joe’s “mistake” was to rely upon Domenic’s assertion that Joe was “out of the picture” and their view that the new Form #1 filed October 3, 2003 was a full and conclusive defence for Joe. This was a conclusion as to the effect of the new Form #1. However, at the least, any person acting responsibly in his own self-interest would conclude that it would be wise to attend at the hearing to give evidence as to who had actual control of Farmers at the relevant times and that the new Form #1 was truthful in its assertion as to the July 1, 2003 date in the change of directors.

[16] As I have said, Spence J. had before him the new Form #1. Spence J. seems to have implicitly made the finding that a new Form #1 does not impact to absolve a director/officer, as named by the pre-existing corporate profile in the public record of the Ministry, from liability to a third party under the relevant statutes until a new Form #1 is recorded (or at least filed) with the Ministry. Joe’s mistake was to believe he would be “out of the picture” simply because of the new Form #1.

[17] In my view, there was not a “mistake” within the meaning of Rule 38.11(1). Joe made an error of judgment in believing he was “out of the picture.” There was no mistake as to time or place of the hearing. Joe intentionally chose not to attend and, at best, relied upon his own opinion and his brother’s lay opinion, as to their legal position. They assumed the risk of non-attendance at the hearing. Joe chose not to attend the hearing because of his belief as to the legal significance and impact of the new Form #1 and that Domenic’s and his view would accord with the trial judge’s view and findings.

[18] In my view, a defendant cannot intentionally ignore a trial when he should reasonably know he is clearly at risk of being held liable and then claim a “mistake” within the meaning of Rule 38.11(1) upon being found liable to the opposing party. There is a paucity of case law in respect of Rule 38.11(1), specifically regarding the meaning of “mistake.” See generally Ewert v. Chapnick (1995), 37 C.P.C. (3d) 76 (Ont. Gen. Div.); Zsoldos v. Ontario Assn. of Architects, [2004] O.J. No. 309 (CA) (QL).

[2]

Ivandaeva Total image Salon Inc. v. Hlembizky, 2003 CanLII 43168 (ON CA)[3]

[27] Other than Stanley Canada Inc. v. 683481 Ontario Ltd. (1990), 1990 CanLII 8098 (ON SC), 74 D.L.R. (4th) 528 (Ont. Gen. Div.)[4], the cases that have considered the rule in its different forms do not discuss the meaning of "affected by". However, a review of the cases in which a successful motion has been brought under rule 37.14(1) and rule 38.11(1), which applies to applications, or their predecessors, to set aside or vary an order suggests that the order must be one that directly affects the rights of the moving party in respect to the proprietary or economic interests of the party. In addition, there is another broad group of cases, usually arising from the sealing of a court file, in which the media has complained that its right to freedom of expression as guaranteed by s. 2(b) of the Canadian Charter of Rights and Freedoms has been compromised and in which the principle of open and accessible court proceedings has been invoked. See, e.g., Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, 211 D.L.R. (4th) 193.[5]

[3] [4] [5]

2701988 Ontario Inc. v. Ok-Shim Jeong, 2020 ONSC 4455 (CanLII)[6]

[1] This is a motion to set aside an order granted to the Applicant corporation on April 28, 2020, during the suspension of the court’s regular operations due to the COVID-19 pandemic. At a telephone case conference, the court ordered the release of $350,000 to the Applicant. The Respondents, Ms. Jeong and the 2313067 Ontario Inc. (of which she is the principal) were not in attendance for the case conference. They submit that the order should be set aside pursuant to r. 38.11 of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194 on the basis that they failed to attend the hearing of the application due to accident, mistake or insufficient notice.

Test pursuant to r. 38.11

[10] Rule 38.11(1) provides that a judgment on an application may be set aside for lack of or - insufficient notice. It reads:

38.11(1) A party or other person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

[11] The parties agree that the analytical framework to be applied under r. 38.11 is the same as for a motion to set aside a default judgment under r. 19.08. As set out in 1493201 Ontario Ltd. v. Giannoylis, 2016 ONSC 1210[7], at para. 12, the factors to consider are:

(a) Was the application made without notice or did the Respondent fail to appear at the hearing of the application through accident, mistake or insufficient notice?
(b) Was the Respondent’s motion to set aside the judgment brought forthwith after the judgment came to her attention?
(c) Did the Respondent’s motion name the first available hearing date that was at least three days after service of the notice of motion?
(d) Does the Respondent have an arguable defence on the merits?
(e) What is the potential prejudice to the Respondent should the motion be dismissed and what is the potential prejudice to the Applicant should the motion be allowed?
(f) What would be the effect of any order the Court might make on the overall integrity of the administration of justice?

[12] These factors are not to be considered as rigid rules. Instead, the court must consider the particular circumstances of each case to determine whether the judgment should be set aside: Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, at para. 50[8]; Natural Energy Systems Inc. v. Hallett, 2019 ONSC 1372, at paras 39-40.[9]

[6] [7] [8] [9]

1202600 Ontario Inc. v. Jacob, 2012 ONSC 361 (CanLII)[10]

[70] A motion to set aside is but one step in the process to determine a matter on its merits. If a case obviously lacks merit, it would be contrary to the direction given by rule 1.04(1) to set the judgment aside.

[71] Thresholds, while helpful in some circumstances in eliminating unnecessary procedures and providing predictability to the law, are generally not in harmony with the expansive interpretive approach described by rule 1.04 that focuses on just, final outcomes achieved in a timely way and at the least cost to the parties.

[72] I am not saying that proper notice, which is an important aspect of natural justice, is not a significant factor in determining whether an outcome is just. However, an interpretation of rules 19.08 or 38.11 that is in harmony with rule 1.04(1) should not limit the court to consideration of a single threshold factor concerning the regularity of notice.

[73] If, perhaps, a party is brought into court as a result of irregular service, I see no reason why the court should not take the opportunity, when the parties are before it, with the time and expense that this entails, to take a look - not a hard look - but a very practical look, to see whether there is any merit to the defendant’s case when a plaintiff advances this argument.

[76] It is my view that rule 1.04 directs me to interpret rule 38.11 so as to consider all relevant factors that, on mature reflection, will secure the most just, most expeditious and least expensive determination of this proceeding on its merits. These include:

a. the regularity of the procedures followed to obtain Default Judgment, including whether it is made on notice, or other factors affecting notice;
b. if regularly obtained, an explanation of the circumstances that led to Default Judgment, including accident, mistake or other personal circumstances of the defendant;
c. the timeliness of the procedures to set aside the judgment; and
d. the triable merits of the defence.

[77] The latter three factors have been reformulated somewhat from how they were described in Chitel, supra, to reflect the more recent pronouncement of the Court of Appeal in Morgan v. Toronto (City) Police Services Board, 2003 CanLII 14993 (ON CA), [2003] O.J. No. 1106 at para. 36.[11]

Analysis

a) Failure to Provide Notice or Sufficient Notice

[78] Mr. McCormick submits that he was not provided with notice or sufficient notice of the application leading to the Default Judgment of Sedgwick J. of April 25, 2007.

[79] There seems little doubt that the process followed to obtain default judgment was irregular.

[80] Although not raised in argument, I am of the view that this matter should never have been brought as an application. It is a garden variety debt collection case which is perfectly suited and normally prosecuted by way of an action.

[100] As such, I am not satisfied that the inadequacies of notice are sufficient to conclude that it is in the interests of justice to set aside the judgment on this basis alone, were this the applicable test, which I do not believe to be the case for rule 38.11.

b) An explanation of the circumstances that led to the Default Judgment

[101] As I have found that notice provided to Mr. McCormick was defective, this would explain the circumstances that led to the Default Judgment.

c) Timeliness of the procedures to set aside the Judgment

[143] While I find that the notice of application was defective and may have led Mr. McCormick to believe that judgment had already been obtained, I nevertheless dismiss the motion to set aside the Order of Sedgwick J. dated April 25, 2007.

[144] I do so on the grounds that Mr. McCormick did not proceed expeditiously to set the motion down as required by rule 38.11.

[145] In addition, I conclude that the materials filed by Mr. McCormick do not meet the low threshold I apply in this issue to demonstrate a defence on the merits such that it would be contrary to the interest of justice to set aside the Default Judgment.

[146] Accordingly, Mr. McCormick’s motion to set aside the Order of Sedgwick J. dated April 25, 2007, is dismissed.

[10] [11]

Segura Mosquera v. Rogers Communications Inc., 2019 ONSC 6187 (CanLII)[12]

[18] A central issue is whether this motion to set aside the dismissal order is governed by R. 37.14 or, as submitted by Rogers and the CCTS, is governed by R. 38.11, namely whether the plaintiff must demonstrate valid claims to have the dismissal order set aside.

[19] Those Rules state:

37.14 (1) A party or other person who,
(a) is affected by an order obtained on motion without notice;
(b) fails to appear on a motion through accident, mistake or insufficient notice; or
(c) is affected by an order of a registrar,
may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion. R.R.O. 1990, Reg. 194, r. 37.14 (1); O. Reg. 132/04, s. 9.
(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just. R.R.O. 1990, Reg. 194, r. 37.14 (2).
38.11 (1) A party or other person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion. R.R.O. 1990, Reg. 194, r. 38.11 (1); O. Reg. 132/04, s. 10; O. Reg. 55/12, s. 3. (emphasis added)

[20] The requirements under R. 38.11 to set aside a judgment on the basis of mistake or accident, have been held to be the same as the requirements to set aside default judgment under R. 19.08; as held in 1493201 Ontario Ltd. v. Giannoylis 2016, 2016 ONSC 1210 (O.S.C.).[7] That court stated:

10 Given the similarity of these provisions and the circumstances in which they operate, it is my view that it is appropriate to adopt the test outlined in Intact Insurance Company v. Kisel[13] for setting aside default judgments to motions to set aside judgment granted on an application under Rule 38.11.
11 In Kisel the Ontario Court of Appeal stated that a Court has to decide whether, in the particular circumstances of the case, it is just to relieve a defendant from the consequence of default. The following criteria, although not rigid rules, apply to a motion (to set aside a default judgment) under Rule 19.08:
(a) Was the motion brought promptly after the Defendant learned of the default judgment?
(b) Does the Defendant have a plausible excuse or explanation for the default?
(c) Does the Defendant have an arguable defence on the merits?
(d) What is the potential prejudice to the Defendant should the motion be dismissed, and the potential prejudice to the Plaintiff should the motion be allowed?
(e) What would be the effect of any order the Court might make on the overall integrity of the administration of justice? (emphasis added)

12 In light of Rule 38.11 and Kisel, the applicable criteria on a motion under Rule 38.11 are as follows:
(a) Was the application made without notice or did the Respondent fail to appear at the hearing of the application through accident, mistake or insufficient notice?
(b) Was the Respondent's motion to set aside the judgment brought forthwith after the judgment came to her attention?
(c) Did the respondent's motion name the first available hearing date that was at least three days after service of the notice of motion?
(d) Does the Respondent have an arguable defence on the merits?
(e) What is the potential prejudice to the Respondent should the motion be dismissed and what is the potential prejudice to the Applicant should the motion be allowed?
(f) What would be the effect of any order the Court might make on the overall integrity of the administration of justice? (emphasis added)
See also 1202600 Ontario Inc. v. Jacob, 2012 CarswellOnt 1335 (O.S.C.), para 76.

[21] The plaintiff did not commence a proceeding in this court in bringing her motion that was dismissed on November 23, 2018. The order in issue dismissed the plaintiff’s motion for leave to transfer the SC Action to this court. Has such leave been granted, that order transfer would result in the SC Action being transferred to this court.

[22] The plaintiff, pursuant to s. 107(1)(c) to (4) of the Courts of Justice Act R.S.O. 1990, Chapter C.34 (the “CJA”) and R. 37.17, may seek the transfer of her SC Action to this court by motion. Although she could have, she was not required to and did not commence an application seeking such transfer to this court.

[23] It is not disputed that the plaintiff as a result of the November 23, 2018 dismissal order order remains entitled to proceed with the SC Action in that court.

[12] [13]

References

  1. 1.0 1.1 R.R.O. 1990, Reg. 194: RULES OF CIVIL PROCEDURE, <https://www.ontario.ca/laws/regulation/900194>, reterived 2020-12-01
  2. 2.0 2.1 Fresh Network v. Alessandro, 2004 CanLII 30078 (ON SC), <http://canlii.ca/t/1htph>, retrieved on 2020-12-01
  3. 3.0 3.1 Ivandaeva Total image Salon Inc. v. Hlembizky, 2003 CanLII 43168 (ON CA), <http://canlii.ca/t/1bv2j>, retrieved on 2020-12-01
  4. 4.0 4.1 Stanley Canada Inc. V. 683481 Ontario Ltd., 1990 CanLII 8098 (ON SC), <http://canlii.ca/t/gbdqh>, retrieved on 2020-12-01
  5. 5.0 5.1 Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41 (CanLII), [2002] 2 SCR 522, <http://canlii.ca/t/51s4>, retrieved on 2020-12-01
  6. 6.0 6.1 2701988 Ontario Inc. v. Ok-Shim Jeong, 2020 ONSC 4455 (CanLII), <http://canlii.ca/t/jbl5l>, retrieved on 2020-12-01
  7. 7.0 7.1 7.2 1493201 Ontario Limited v Giannoylis, 2016 ONSC 1210 (CanLII), <http://canlii.ca/t/gnd1n>, retrieved on 2020-12-01
  8. 8.0 8.1 Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194 (CanLII), <http://canlii.ca/t/g65rt>, retrieved on 2020-12-01
  9. 9.0 9.1 Natural Energy Systems Inc. v. Hallett, 2019 ONSC 1372 (CanLII), <http://canlii.ca/t/hxs43>, retrieved on 2020-12-01
  10. 10.0 10.1 1202600 Ontario Inc. v. Jacob, 2012 ONSC 361 (CanLII), <http://canlii.ca/t/fpwwx>, retrieved on 2020-11-06
  11. 11.0 11.1 Morgan v. Municipality of Toronto Police Services Board, 2003 CanLII 14993 (ON CA), <http://canlii.ca/t/1brrk>, retrieved on 2020-11-06
  12. 12.0 12.1 Segura Mosquera v. Rogers Communications Inc., 2019 ONSC 6187 (CanLII), <http://canlii.ca/t/j31cq>, retrieved on 2020-12-01
  13. 13.0 13.1 Intact Insurance Company v. Kisel, 2015 ONCA 205 (CanLII), <http://canlii.ca/t/ggv8t>, retrieved on 2020-12-01