



COURT OF APPEAL FOR ONTARIO

CITATION: Royal Bank
    of Canada v. Datanet Wireless Inc., 2013 ONCA 706

DATE: 20131118

DOCKET: C57035

Cronk, Pepall and Strathy JJ.A.

BETWEEN

Royal Bank of Canada

Plaintiff (Respondent)

and

Datanet
    Wireless Inc., Janet Nelson, Douglas Brent Hooton, 1754903
    Ontario Ltd., VirtuallyAnywhere.ca Inc., Wayne
    Cook, and Toronto Dominion Bank

Defendants (Appellant Janet Nelson)

Jeffrey C. Silver, for the appellant

Natalie Marconi, for the respondent

Heard: November 12, 2013

On appeal from the order of Justice James M. Spence of
    the Superior Court of Justice, dated May 30, 2013.

ENDORSEMENT

[1]

The appellant, Janet Nelson, appeals from the order of Spence J. of the Superior
    Court of Justice, dated May 30, 2013, dismissing her motion to set aside a
    default judgment granted against her on April 15, 2011.  By that judgment, the
    appellant and certain of her co-defendants were held liable to the respondent
    bank for damages for fraud in relation to a loan made to the defendant Datanet
    Wireless Inc.

[2]

The appellant advances four main grounds of appeal.  She argues, first,
    that the motion judge misapprehended and misapplied the governing test for
    setting aside a default judgment, in particular, the concept of an arguable
    defence under that test.  We do not accept this submission.

[3]

The motion judge explicitly addressed the applicable pre-requisites for
    the setting aside of a default judgment, as described in
HSBC Securities (Canada)
    Inc. v. Firestar Capital Management Corp
., 2008 ONCA 894, 245 O.A.C. 47,
    leave to appeal to S.C.C. refused (2009), 399 N.R. 398 (note) (S.C.C.),
Morgan
    v. Toronto (City) Police Services Board
(2003), 34 C.P.C. (5th) 46, 169
    O.A.C. 390 (C.A.) and related authorities.  He considered all the relevant
    factors in the context of the evidentiary record before him and concluded that
    the appellant had failed to satisfy any of the requirements for the setting
    aside of the judgment in question. He found that the appellant: (1) failed to
    provide a satisfactory explanation for her failure to appear on the motion to
    strike her statement of defence; (2) failed to furnish an adequate explanation
    for her delay of at least four months in moving to set aside the default
    judgment; and (3) failed to demonstrate that she had an arguable defence to the
    respondents action.

[4]

In our view, the motion judges identification of the relevant test and
    his consideration of the requirements for setting aside the default judgment
    reveal no error.  His pertinent findings were amply supported by the record. 
    We see no basis for appellate intervention with his findings.

[5]

In particular, we note that there was evidence before the motion judge
    from both a Bank official and one of the co-defendants that almost one-half of
    the loan proceeds advanced by the respondent bank for the benefit of Datanet
    Wireless Inc. was transferred to a bank account controlled by the appellant in
    her personal capacity on the same day that the funds were advanced.  In the
    face of this powerful, inculpatory evidence, the appellants only explanation
    for the use of the loan proceeds was a bald denial that she personally had
    received any of the funds advanced by the respondent.

[6]

Second, the appellant contends that she was denied natural justice and
    procedural fairness when her pleading was struck and that this excuses her
    default.  The record belies this contention.

[7]

The appellants statement of defence was struck by court order dated
    February 11, 2011.  As we have said, default judgment was granted on April 15,
    2011.  The appellant was informed in mid-November 2010 that her former lawyers intended
    to seek an order removing them from the record.  She was also informed, as
    early as November 26, 2010, that the respondent`s motion to strike her
    statement of defence was scheduled to proceed on February 11, 2011.

[8]

Notwithstanding this advance notice, the appellant elected not to
    participate in either motion, instead ostensibly relying on her brother  a
    co-defendant who, like the appellant, had been accused of fraud by the
    respondent  to protect her interests.  Having decided for her own reasons to
    pursue this course of action, the appellant was not entitled to notice of any
    further steps taken by the respondent to collect the monies owed to it.

[9]

Third, the appellant claims that the motion judge erred by finding that
    there was undue delay in bringing the motion to set aside the default
    judgment.  We disagree.

[10]

Delay
    was but one factor considered by the motion judge when determining whether to
    set aside the default judgment.  Although the appellant maintains that she did
    not learn of the default judgment until she attended her
    examination-in-aid-of-execution in mid-December 2011, she took no steps to
    contact counsel until mid-April 2012.  By her own admission, the appellant had
    learned of the default judgment in December, approximately four months earlier.

[11]

In
    these circumstances, the motion judge did not err in finding that the appellant
    had delayed, without adequate explanation, in moving to set aside the default
    judgment.  By the time she did so, the respondent had compromised its claims
    against, and hence its ability to recover its judgment from, certain of the other
    key defendants.  This, too, was a factor that told against granting the
    discretionary relief sought by the appellant.

[12]

Finally,
    the appellant argues that the motion judge applied the foregoing factors as
    though they were rigid rules and without balancing the prejudice to the parties
    or the interests of justice. We disagree. The appellant failed to satisfy any
    of the factors and the respondent demonstrated actual prejudice. The motion
    judge was clearly of the view that the interests of justice did not favour
    setting aside the default judgment.

[13]

The
    appeal is dismissed.  The respondent is entitled to its costs of the appeal,
    fixed in the amount of $25,000, inclusive of disbursements and all applicable
    taxes.

E.A. Cronk J.A.

S.E. Pepall J.A.

G.R. Strathy J.A.


