Mountain View Farms v. McQueen, 2014 ONCA 194

• Jurisdiction: Ontario
• Judge: Gillese, Rouleau and Tulloch, JJ.A.
• Neutral Citation: 2014 ONCA 194
• Citation: 2014 ONCA 194,(2014), 317 O.A.C. 255 (CA),119 OR (3d) 561,372 DLR (4th) 526,317 O.A.C. 255,119 O.R. (3d) 561,372 D.L.R. (4th) 526,(2014), 317 OAC 255 (CA),317 OAC 255
• Date: 13 February 2014
• Court: Court of Appeal (Ontario)

Mountain View Farms v. McQueen (2014), 317 O.A.C. 255 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. MR.041

Mountain View Farms Ltd. (plaintiff/appellant) v. George Donald McQueen (defendant/respondent)

(C56832; 2014 ONCA 194)

Indexed As: Mountain View Farms Ltd. v. McQueen

Ontario Court of Appeal

Gillese, Rouleau and Tulloch, JJ.A.

March 14, 2014.

Summary:

The plaintiff provided crop services to the defendant for several years. When the defendant failed to fully pay for the services, the plaintiff had him sign an invoice to acknowledge the outstanding amount of just under $50,000. Pre-printed words on the bottom of the invoice stated that interest would be charged on overdue accounts at the rate of 24% per year. The plaintiff later sued the defendant for the unpaid amount plus interest at an annual rate of 24%. The defendant did not respond to the suit and default judgment was entered against him. Six years later, the defendant moved to have the default judgment set aside. He acknowledged that he owed the principal amount, but maintained that he had never agreed to pay interest of 24% per year.

The Ontario Superior Court, in a decision reported at [2013] O.T.C. Uned. 1440, did not set aside the default judgment, but rather varied it by substituting an annual interest rate of 5%. The plaintiff appealed.

The Ontario Court of Appeal allowed the appeal. The court set aside the portion of the order that varied the interest rate in the default judgment, ordered that the 24% interest provision in the default judgment be set aside, permitted the defendant to file a defence, and allowed the matter to proceed on the rate of interest.

Practice - Topic 3679

Evidence - Affidavits - Use of - Affidavits - Evidence - Admissibility - Mountain View Farms Ltd. (owned by Roger and Bill McLeod) provided crop services to McQueen - When McQueen failed to pay for the services, Mountain View sued him for the unpaid amount plus interest of 24% per year - McQueen did not respond to the suit and default judgment was entered against him - Six years later, McQueen moved to have the default judgment set aside - He acknowledged that he owed the principal amount, but maintained that he had never agreed to pay interest of 24% per year - The motion judge did not set aside the default judgment, but rather varied it by substituting an annual interest rate of 5% - Mountain View appealed, arguing that the motion judge erred by admitting McQueen's affidavit evidence - It submitted that the affidavit was not reliable because McQueen could not remember having signed it and because McQueen's memory was unreliable - The Ontario Court of Appeal dismissed this ground of appeal - The problems identified by Mountain View went to weight rather than the admissibility of the affidavit - The motion judge's reasons showed that he gave the affidavit little to no weight - He found that McQueen had an arguable defence on the question of the interest rate based on other evidence, particularly that of Bill McLeod who testified that Mountain View had a history of not charging McQueen interest on overdue accounts - See paragraphs 44 to 46.

Practice - Topic 6107

Judgments and orders - Amendment, rescission and variation of judgments and orders - Amendment or variation - Circumstances permitting - Mountain View Farms Ltd. provided crop services to McQueen - When McQueen failed to pay for the services, Mountain View had him sign an invoice to acknowledge the amount outstanding - Pre-printed words on the bottom of the invoice stated that interest would be charged on overdue accounts at the rate of 24% per year - Mountain View later sued McQueen for the unpaid amount plus interest of 24% per year - McQueen did not respond to the suit - Default judgment was entered against him - Six years later, McQueen moved to have the default judgment set aside - He acknowledged that he owed the principal amount, but maintained that he had never agreed to pay interest of 24% per year - The motion judge did not set aside the default judgment, but rather, pursuant to rule 19.08, varied it by substituting an annual interest rate of 5% - He found "inexplicable delay" on McQueen's part that had caused prejudice to Mountain View, but was satisfied that McQueen had raised an arguable defence respecting the interest rate that applied to the principal debt - Mountain View appealed, arguing that the motion judge erred when he used his power under rule 19.08 to substitute the interest rate - The Ontario Court of Appeal allowed the appeal - McQueen's motion sought to set aside the default judgment - Therefore, the motion judge's task was to determine whether the interests of justice favoured setting aside the default judgment - One factor in that determination was whether there was an arguable defence on the merits - The materials filed on the motion did not seek a determination of whether, if there were an arguable defence, that defence should succeed - To move from finding an arguable defence to a final determination was not a just result - A just result presupposed that both sides had the opportunity to be fairly heard on the issues of (1) whether McQueen was bound to pay interest at an annual rate of 24%; and (2) if not, what the appropriate rate of interest was - The appropriate course was to set aside the default judgment in part, and order that the matter proceed on the interest issue - See paragraphs 57 to 65.

Practice - Topic 6196

Judgments and orders - Setting aside default judgments (incl. noting in default) - General - [See Practice - Topic 6107].

Practice - Topic 6196

Judgments and orders - Setting aside default judgments (incl. noting in default) - General - Mountain View Farms Ltd. provided crop services to McQueen - When McQueen failed to pay for the services, Mountain View had him sign an invoice to acknowledge the amount outstanding - Pre-printed words on the bottom of the invoice stated that interest would be charged on overdue accounts at the rate of 24% per year - Mountain View later sued McQueen for the unpaid amount plus interest of 24% per year - McQueen did not respond to the suit - Default judgment was entered against him - Six years later, McQueen moved to have the default judgment set aside - He acknowledged that he owed the principal amount, but maintained that he had never agreed to pay interest of 24% per year - The motion judge did not set aside the default judgment, but rather varied it by substituting an annual interest rate of 5% - He found "inexplicable delay" on McQueen's part that had caused prejudice to Mountain View, but was satisfied that McQueen had raised an arguable defence respecting the interest rate that applied to the principal debt - Mountain View appealed, arguing that the motion judge erred in his application of the test for setting aside a default judgment - The Ontario Court of Appeal dismissed this ground of appeal - The motion judge considered the relevant factors - The motion judge did not fail to give adequate weight to the unexplained delay and prejudice to Mountain View - Rather, in the exercise of his discretion, after duly considering the factors, he concluded that McQueen's arguable defence weighed most heavily and caused the interests of justice to favour setting aside - See paragraphs 47 to 56.

Practice - Topic 6199

Judgments and orders - Setting aside default judgments (incl. noting in default) - Delay in applying - [See Practice - Topic 6196].

Cases Noticed:

Watkins v. Sosnowski, [2012] O.T.C. Uned. 3836; 2012 ONSC 3836, refd to. [para. 47].

Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. et al., [2007] O.A.C. Uned. 191; 87 O.R.(3d) 479; 2007 ONCA 333, refd to. [para. 49].

HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp. et al. (2008), 245 O.A.C. 47; 2008 ONCA 894, refd to. [para. 55].

Counsel:

M.A. Cummings, for the appellant;

V.L. Vandergust, for the respondent.

This appeal was heard on February 13, 2014, before Gillese, Rouleau and Tulloch, JJ.A., of the Ontario Court of Appeal. Gillese, J.A., delivered the following judgment for the court on March 14, 2014.