Ontario Civil

Civil Procedure

There was plausible excuse for failure of defendants to defend claim

CM Inc. hired corporate defendant to install paving stones at plaza at price of $140,000. Work was completed by defendant’s subcontractors in November 2009. All rights and interests in plaza were transferred from CM Inc. to plaintiff pursuant to court order. Plaintiff commenced action against defendants for breach of contract and negligence. Plaintiff claimed $200,000 for cost of removing and re-installing paving stones as it alleged that many areas began heaving during winter of 2010-2011 as result of improper installation. Defendants were served with claim on August 29, 2011. Plaintiff agreed to waive filing of statement of defence pending investigation by defendants’ insurer. Defendants were noted in default on November 1, 2011. Order dismissing action as abandoned dated June 18, 2012 was received by defendants on or near June 18, 2012. Default judgment was issued on October 25, 2013 in amount of $119,030.41. Notice of garnishment was issued on October 2, 2014. Defendants brought motion to set aside noting in default, default judgment and stay notice of garnishment. Motion granted. Defendants brought motion without delay upon learning of default judgment. There was plausible excuse for failure of defendants to defend claim. They believed that action was being defended by their insurer. Defendants had arguable defence that damages occurred outside one year warranty provided for work performed. Prejudice of defendants being held liable for damages and costs in excess of $120,000 based on alleged breach of contract for which there was arguable defence greatly outweighed prejudice, if any, to plaintiff. Noting in default and default judgment were set aside. Defendant was to deliver statement of defence within two weeks. Funds seized pursuant to notice of garnishment were to be returned to defendants.

Foremost Cranberry Mews Limited Partnership v. Ferreri (Apr. 30, 2015, Ont. S.C.J., M. Faieta J., File No. CV-11-433182) 253 A.C.W.S. (3d) 790.

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