



COURT OF APPEAL FOR ONTARIO

CITATION: Ken Jackson Construction Limited v. Macklin, 2017
    ONCA 324

DATE: 20170421

DOCKET: C62865

Weiler, Pardu and Roberts JJ.A.

BETWEEN

Ken Jackson Construction Limited

Plaintiff (Respondent)

and

Geoffrey
    Macklin, Jeremey Macklin and Macklin Bros.

Construction
    Ltd., sometimes known as Macklin Bros.

Construction, and
    sometimes known as MBC

Defendants
    (Appellants

Robert J. Reynolds, for the appellants

Douglas A. Grace and Sha Habi, for the respondent

Heard: April 13, 2017

On appeal from the order of Justice Gibson of the
    Superior Court of Justice, dated September 20, 2016

AMENDED ENDORSEMENT

[1]

At the request of the appellants, respondent not opposing, this court’s
    endorsement of April 21, 2017 is modified to increase the costs awarded to the
    appellant to $8,500 for fees plus $1,539 for disbursements plus HST.

“K.M. Weiler J.A.”

“G. Pardu J.A.”

“L.B. Roberts J.A.”





COURT OF APPEAL FOR ONTARIO

CITATION: Ken Jackson Construction Limited v. Macklin, 2017
    ONCA 324

DATE: 20170421

DOCKET: C62865

Weiler, Pardu and Roberts JJ.A.

BETWEEN

Ken Jackson Construction Limited

Plaintiff (Respondent)

and

Geoffrey
    Macklin, Jeremey Macklin and Macklin Bros.

Construction
    Ltd., sometimes known as Macklin Bros.

Construction, and
    sometimes known as MBC

Defendants (Appellants)

Robert J. Reynolds, for the appellants

Douglas A. Grace and Sha Habi, for the respondent

Heard: April 13, 2017

On appeal from the order of Justice Gibson of the
    Superior Court of Justice, dated September 20, 2016,

ENDORSEMENT

[1]

The appellants appeal the dismissal of their motion to set aside the
    noting in default and default judgment obtained by the respondent. In its action,
    the respondent sought payment of outstanding invoices for work rendered as the
    corporate appellant's subcontractor on various construction projects.

[2]

We agree that the motion judge erred and that his decision should be set
    aside, for the following reasons.

[3]

Firstly, the Registrar signed judgment against the individual appellants
    for the amounts of the invoices billed to the corporate appellant. The claims
    pleaded by the respondent against the individual appellants were for breach of
    trust and conversion. There was no basis pleaded that would make the individual
    appellants liable for invoices billed to the corporation. The respondent did
    not seek to pierce the corporate veil: see
Mitchell v. Lewis
2016 ONCA
    903. In any event, personal liability like this would not amount to a debt or
    liquidated demand in money within the judgment signing jurisdiction of the
    Registrar: see
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, r. 19.04(1).

[4]

Secondly, the Registrar had no jurisdiction to grant judgment against the
    individual appellants on the claim against them for breach of trust and
    conversion, as this was also not for a debt or liquidated demand in money.

[5]

Specifically, in its statement of claim, the respondent sought
    unspecified damages for breach of trust and conversion. It did not plead any
    facts which would have allowed a court to conclude that the appellants had
    misapplied trust funds or the amount of any wrongful use of trust funds.
    Moreover, it is clear from the statement of claim that the claim against the
    individual appellants is merely contingent; it is only in the event that they
    have failed to retain sufficient trust funds that the claim is made. To that
    end, the respondent sought an accounting.

[6]

Further, the Registrar erred in awarding interest on the judgment
    against the appellants at the rate of 2 per cent per month when the statement
    of claim failed to plead the respondent's entitlement to such a rate. There was
    no basis pleaded in the statement of claim that would allow interest to be
    awarded at a rate other than in accordance with ss. 128 and 129 of the
Courts
    of Justice Act
, R.S.O. 1990, c. C.43.

[7]

In summary, where, as here, with respect to the liability of the
    individual appellants and the rate of interest claimed, the statement of claim
    did not contain the particulars required to sign default judgment for a debt or
    liquidated demand of money, the default judgment is granted without
    jurisdiction. The appellants were entitled to have the judgment set aside as of
    right in the interests of justice. See
Schill & Benninger Plumbing and
    Heating v. Gallagher Estate
, [2001] O.J. No. 260 (C.A.), paras. 8-10. The
    motion judge erred in not doing so.

[8]

Where a Registrar has jurisdiction to sign default judgment, a motion judge
    has discretion to set aside a default judgment after weighing and balancing the
    following five factors, which were set out in
Intact Insurance Co v. Kisel,
2015 ONCA 205, 125 O.R. (3d) 365, at para. 14:

(a) whether the motion was brought
    promptly after the defendant learned of the default judgment;

(b) whether the defendant has a
    plausible excuse or explanation for the default;

(c) whether the defendant has an
    arguable defence on the merits;

(d) the potential prejudice to the
    defendant should the motion be dismissed, and the potential prejudice to the
    plaintiff should the motion be allowed; and

(e) the effect of
    any order the court might make on the overall integrity of the administration
    of justice.

[9]

Here, the Registrar had jurisdiction to sign judgment against the
    corporate appellant for the amounts invoiced to it by the respondent. Although
    the motion judge enumerated the five well-known criteria from
Kisel
,
    he applied them too rigidly and erred in failing to consider the overarching
    factor of whether the justice of the case required him to allow the action to
    be adjudicated on its merits.

[10]

The appellants' evidence met the air of reality test and demonstrated an
    arguable defence on the merits in relation to the issues of whether the
    respondents action was statute-barred, whether the rate of interest claimed
    was sustainable and whether there was any claim for breach of trust against the
    individual appellants. Further, the respondent filed no evidence that it would
    suffer any prejudice if the noting in default and default judgment were set
    aside.

[11]

Having regard to the arguable defences on the merits and absence of
    prejudice, as well as the relatively short delay of about four months between
    the service of the statement of claim and the appellants' retaining counsel to
    deal with the claim, together with the appellants' explanation for the delay,
    the criteria to set aside the noting in default and default judgment are
    satisfied.

[12]

The motion judge erred in principle, and his exercise of discretion refusing
    to set aside the noting in default and default judgment was unreasonable.

[13]

Accordingly, the appeal is allowed. The decision of the motion judge is
    set aside. The default judgment and the noting in default of the appellants are
    set aside.

[14]

The appellants shall serve and file their statement of defence within
    thirty days of the release date of these reasons.

[15]

With respect to costs, the appellants are entitled to the costs of this
    appeal which we fix at $8,500.00 inclusive of disbursements and taxes.

[16]

Any order for costs on the motion below in favour of the respondents on
    the appeal is set aside, and in its place will be substituted an order of costs
    in favour of the appellants in an amount equal to 66% of the costs awarded by
    the motion judge. This reduced amount is awarded to recognize that the
    appellants failure to file a timely defence contributed to the issues giving
    rise to the appeal.

K.M.
    Weiler J.A.

G.
    Pardu J.A.

L.B.
    Roberts J.A.


