An Ontario court has allowed a defendant’s motion to revive a sexual harassment and wrongful dismissal case, setting aside a default judgment that arose when his statement of defence was struck for failing to comply with litigation deadlines.
The ruling underscores how a court will generally strive to resolve civil cases on the merits rather than technical oversights when serious allegations are at play.
The plaintiff, V.F., is a former employee of Arista Homes. The defendant, J.R., was V.F.’s direct supervisor and also worked at Arista Homes. V.F. claimed J.R. engaged in “unwelcome sexual communication and physically touched her,” prompting her to file an application before the Human Rights Tribunal of Ontario (HRTO). J.R. was criminally charged in connection with the allegations, but the charges were withdrawn by the Crown.
Case deferred pending criminal proceeding
The HRTO deferred the case pending resolution of the criminal proceeding. Once the charges were concluded, J.R. filed his response within the required timeframe, and the tribunal reinstated V.F.’s application. Soon after, V.F. commenced a civil action alleging wrongful dismissal, sexual harassment and sexual battery. When that civil action got underway, the HRTO proceeding was eventually dismissed as barred by statute.
Court filings show that as the civil case progressed, J.R. eventually left Arista Homes and later sustained severe injuries in a motorcycle accident, requiring full-time care for three months. He continued to represent himself once his counsel ceased acting but failed to update his address with the court. According to J.R., he “does not recall receiving any documents” after filing a statement of defence and believed there had been “no movement” in the case.
$500,000 judgment
The affidavits of service submitted by V.F. detail multiple attempts to serve J.R. by mail and email with notices of examination, motions and other court documents. Despite these efforts, J.R. did not attend examinations or respond to multiple notices. As a result, the court struck his statement of defence and eventually noted him in default. An ex parte motion for judgment was then granted, ordering J.R. to pay approximately $500,000 in damages and interest. V.F. provided J.R. with the default judgment only after the fact, prompting him to move to set it aside.
In its ruling, the court reviewed Rule 19.08(2) of the Rules of Civil Procedure, which permits a judge to set aside a judgment obtained in default “on such terms as are just.” The court also cited a three-part test from Mountain View Farms Ltd. v. McQueen: whether the motion was brought promptly after learning of the default judgment, whether there is a plausible excuse for the default, and whether the defendant has an arguable defence on the merits.
On the question of timeliness, the court found that J.R. moved quickly once he learned he had been noted in default. “I accept Ramos’ evidence that he moved promptly when he learned that the Plaintiff had obtained default judgment against him,” the ruling states. The court also accepted that J.R.’s new counsel acted “expeditiously” in bringing the motion.
Ignoring litigation?
Regarding an explanation for the default, the court partly accepted and partly doubted J.R.’s claim that he did not receive service because he had changed addresses and lost access to the email set up by his former lawyer. “I have difficulty accepting Ramos’ explanation that he did not receive notice of any proceedings,” the court stated. However, it noted that V.F.’s counsel was repeatedly mailing documents to the same address without receiving any response. “It appears probable that…Ramos ignored the litigation with the expectation that the claim would be dismissed. This…is not what occurred.”
Ultimately, the court determined that fault was shared between J.R. and the plaintiff. While J.R. “did not update his address for service,” the ruling also found the plaintiff “bears some responsibility for repeatedly serving Ramos by ordinary mail at an address that elicited no response.”
Arguable defence on the merits
The court next considered whether J.R. had an “arguable defence on the merits.” According to the ruling, it is a “low threshold” to show that a defence has an air of reality. J.R.’s statement of defence fully denies the allegations, and he had previously resisted criminal charges that were withdrawn. The court observed that the seriousness of the allegations, including sexual assault and battery, made it paramount for the case to be determined on its merits rather than remain in default: “It is contrary to the administration of justice and the integrity of the judicial system to allow the extremely serious allegations against Ramos to be determined by default, and not upon the merits of the case.”
In setting aside the default judgment, the court noted that J.R. could suffer “potentially devastating prejudice” if the findings were allowed to stand without a trial. It held that V.F. would not be unduly harmed by being required to undergo cross-examination or a trial. “While it is true that she will be required to undergo cross-examination…such hardships are necessary to ensure the integrity of the administration of justice,” the court said, adding that other forms of prejudice “may be compensated financially.”
As part of its final order, the court set aside the noting in default and the default judgment. It also revived the lawsuit and directed the parties to agree on a litigation timetable. If they cannot agree, they can return before the court. J.R. was ordered to pay V.F. costs “thrown away” due to the steps already taken in the proceeding. Failing an agreement on those costs, either party may return to the court for a determination. Because J.R. was ultimately successful on the motion, he is entitled to his costs of that motion, although any amount is to be set off against the costs payable to V.F.
To conclude, the court cited its obligation under the Rules of Civil Procedure to seek the “just, most expeditious and least expensive determination of every civil proceeding on its merits.” According to the ruling, “Determining the result of civil proceedings on technical failings is, and must remain, the exception to the general principle.”
Under the court’s direction, V.F. and J.R. must now return to the litigation process. The lawsuit, which involves serious claims of workplace sexual misconduct, termination and damages, will proceed with both sides present to contest liability and the quantum of any award. As the ruling notes, “the administration of justice must not be silenced to ease the burden of civil litigation.”
For more information, see Fera v. Arista Homes Limited, et al, 2024 ONSC 7152 (CanLII).
