Set-Aside Default Judgement (ROCP)

R.R.O. 1990, Reg. 194: RULES OF CIVIL PROCEDURE

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).

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

[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).