T-1297-88
Walter Muller (Plaintiff)
v.
The Queen (Defendant)
INDEXED AS: MULLER V. CANADA
Trial Division, Strayer J.—Vancouver, October 17
and 18, 1988.
Practice — Judgments and orders — Default judgment —
Statement of defence not filed within time limit prescribed by
R. 402(2)(a) — Ex parte motion for default judgment on first
business day after defence due — Application for default
judgment "made" when heard by Court, not when notice of
motion filed — Interpretation influenced by context i.e.
default judgment discretionary remedy — Success of action
doubtful as serious issues of fact and law — Plaintiff not
prejudiced by delay considering (1) short duration, and (2)
unable to proceed with action until access to information
application heard.
Practice — Costs — Defendant to pay costs of unsuccessful
ex parte motion for default judgment and application for leave
to file statement of defence late — Delay cause of motion —
Delay unexplained.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canadian Charter of Rights and Freedoms, being Part I
of the Constitution Act, 1982, Schedule B, Canada Act
1982, 1982, c. 11 (U.K.), s. 15.
Federal Court Rules, C.R.C., c. 663, RR. 402(2)(b)(i),
(c),(3), 439(1),(3), 440.
Income Tax Act, S.C. 1970-71-72, c. 63, s. 232(4).
Privacy Act, S.C. 1980-81-82-83, c. I I I, Schedule II.
CASES JUDICIALLY CONSIDERED
REFERRED TO:
Waterside Ocean Navigation Co. Inc. v. International
Navigation Ltd., [1977] 2 F.C. 257 (T.D.); Chinoin v.
Deputy Attorney General of Canada, [1977] 2 F.C. 313
(T.D.); Vespoli v. The Queen, [1983] 1 F.C. 337 (T.D.);
R. v. Rhine, [1979] 2 F.C. 308 (T.D.); Smith v. The
Queen, [1977] 2 F.C. 481 (T.D.); Laird v. Minister of
National Revenue (1987), 9 F.T.R. 121 (T.D.).
APPEARANCE:
Walter Muller on his own behalf.
COUNSEL:
J. R. Haig, Q.C. for defendant.
PLAINTIFF ON HIS OWN BEHALF:
Walter Muller, Vancouver.
SOLICITORS:
Deputy Attorney General of Canada for
defendant.
The following are the reasons for order ren
dered in English by
STRAYER J.: I heard together an application by
the plaintiff for a default judgment, and an
application by the defendant for either a declara
tion that there should be accepted for filing the
statement of defence submitted to the Court on
October 7 or in the alternative for leave for the
defendant to file a statement of defence now.
The statement of claim was filed in this action
on July 4, 1988. It is essentially a claim for
unliquidated damages. It then being long vacation,
the defendant filed an appearance on July 6, 1988.
Therefore, pursuant to Rule 402(3) [Federal
Court Rules, C.R.C., c. 663], the time for filing a
defence did not commence until after long vaca
tion so that the defence was not due until Septem-
ber 30, 1988. No defence was filed as of that date.
On October 3, 1988, the first business day after
September 30, the plaintiff, without warning to the
defendant's counsel, filed this application for
default judgment. On October 7 the defendant
presented to the Court Registry a letter of that
date enclosing a statement of defence. Counsel for
the defendant was advised by the District
Administrator that he would not file the defence in
such circumstances, and that the matter should be
raised before the Court on October 17 when the
plaintiff's notice of motion for default judgment
was returnable. Subsequently on October 12 the
defendant filed its notice of motion returnable for
the same date, seeking a declaration that the
defence should be accepted or, in the alternative,
leave to file late pursuant to paragraph 402(2)(c)
of the Rules.
I will deal first with the defendant's motion
because if it is well founded it precludes the suc
cess of the plaintiff's motion. The motion for a
declaration that the statement of defence tendered
on October 7 should have been accepted raises the
question as to when an application is considered to
have been "made". Subparagraph 402(2) (b) (i)
permits a defence to be filed after the expiration of
30 days from the service of the statement of claim
if it is filed before "an application has been made
for default judgment". The District Administrator,
following what appears to be a common practice,
rejected the statement of defence for filing on
October 7 because it was considered that an
application had already been made for default
judgment on October 3 with the filing of the notice
of motion of the plaintiff. The question is a dif
ficult one but it appears to me that the application
should not be considered to have been made until
it is actually heard by the Court. It has been held
by this Court in somewhat different contexts that
an application is not made when a notice of motion
is filed but only when the subject-matter of the
notice of motion is heard by the Court.' It is true
that in one case 2 it was held that for the purposes
of subsection 232(4) of the Income Tax Act [S.C.
1970-71-72, c. 63], an application is made within
fourteen days of a seizure of documents for an
order to hold a hearing to determine solicitor-cli
ent privilege questions if a notice of motion is filed
within those fourteen days even though the return
able date may be some time after that period. In
that particular context such an interpretation of
the Income Tax Act is essential to prevent the
taxpayer from having his rights defeated by the
mere fact that a hearing of his motion by the
Federal Court could not be held prior to the expiry
of the fourteen days. The purposes of the Act
would be adequately served by requiring the tax
payer to indicate within fourteen days of the sei
zure whether he is going to be seeking a judicial
determination.
1 Waterside Ocean Navigation Co. Inc. v. International
Navigation Ltd., [1977] 2 F.C. 257 (T.D.), at p. 263; Chinoin
v. Deputy Attorney General of Canada, [1977] 2 F.C. 313
(T.D.), at p. 317.
2 Vespoli v. The Queen, [1983] 1 F.C. 337 (T.D.), at pp.
340-341.
This indicates the importance of the context of
the Rules which are to be interpreted. In the
context of default judgment, it must first be under
lined that under the Rules of our Court default
judgment is never automatic but a matter for the
exercise of discretion by the Court.' Further,
although by Rule 439(1) an application for default
judgment may be made ex parte, by Rule 439(3)
the Court may set aside or vary a default judg
ment even after it is made, "on such terms as seem
just" and this is done most frequently where
default judgment has been obtained ex parte. In
other words, the Rules favour notice to defendants
before default judgment is entered. This gives
them an opportunity to show cause why default
judgment should not be entered or to take steps to
file a defence. The interpretation I have given to
subparagraph 402(2)(b)(i) means that until the
Court actually hears the application for default
judgment, the defendant can overcome his proce
dural lapse. A similar purpose, discouraging final
disposition of cases on the grounds of default in
procedure, may be found in Rule 440, where a
defendant cannot obtain dismissal of a case for
want of prosecution unless he has given notice to
the plaintiff that unless the plaintiff takes the
necessary steps to bring the action on for trial, an
application for dismissal will be made. It is surely
preferable that cases properly commenced in the
Court be disposed of on their merits and after a
proper hearing rather than through one party
taking advantage of the procedural lapse of the
other. In such a context, I would therefore inter
pret subparagraph 402(2)(b)(i) of the Rules to
mean that a statement of defence can be filed at
any time prior to the hearing of an application for
default judgment whenever the notice of motion
may have been filed to bring on that application.
In the present case, the statement of defence
should be filed nunc pro tunc effective October 7,
ten days prior to the hearing of the plaintiffs
notice of motion for default judgment, thus pre
cluding such default judgment.
3 See, e.g. R. v. Rhine, [1979] 2 F.C. 308 (T.D.), at p. 313.
Quite apart from this point of law, I would in
any event have exercised my discretion against
granting default judgment and in favour of allow
ing the defendant to file its statement of defence at
this time. With respect to both questions, it is
appropriate that I consider whether there is a
serious doubt as to whether the plaintiff would
succeed if his action were tried. 4 There appear to
be serious issues of fact as to whether certain
information was in the plaintiffs personnel records
in the Department of National Defence and if so
whether such information was disclosed to anyone
but himself and the Privacy Coordinator of that
department. In part the claim is for damages for
libel and slander and there certainly appears to be
a potential issue of whether in law any of the
publication, if proven, would give rise to liability.
In determining whether default judgment should
be given or leave granted for late filing of a
defence, it is also appropriate to consider the
amount of time which has elapsed and the possible
prejudice to the plaintiff. In the present case, the
defendant was prepared to file the statement of
defence within seven days after the time had
elapsed. While no explanation for the delay has
been provided by the defendant by proper evi
dence, this is a matter appropriate for consider
ation in the award of costs but it is difficult to see
what prejudice could have been caused to the
plaintiff. It is apparent from his statement of claim
and from his submissions before me that he cannot
readily proceed further with this action until there
has been a determination in another proceeding
launched by him in this Court, T-484-88, under
the Privacy Act [S.C. 1980-81-82-83, c. 111,
Schedule II], with respect to access to certain
information now being withheld by the defendant.
The plaintiff himself submitted to me that the
present action should not proceed further until the
Privacy Act matter is heard, that hearing now
having been set for December, 1988. It is therefore
impossible to see what prejudice he has suffered by
4 See, e.g. Smith v. The Queen, [1977] 2 F.C. 481 (T.D.);
Laird v. Minister of National Revenue (1987), 9 F.T.R. 121
(T.D.), at p. 122.
the delay of one week in the filing of the statement
of defence.
The plaintiff invoked the Canadian Charter of
Rights and Freedoms [being Part I of the Consti
tution Act, 1982, Schedule B, Canada Act 1982,
1982, c. 11 (U.K.)], but the only section which
appears to have any relevance in this matter is
section 15 which guarantees equality before the
law. As I indicated to the plaintiff in Court, a
refusal to him of default judgment in this matter
would be consistent with the way in which such
applicants are normally treated. Indeed, if he were
represented by a lawyer, it is extremely unlikely
that his counsel would have applied for default
judgment on the first possible business day after
the expiry of the time for filing a statement of
defence, at least without warning counsel for the
defendant in advance. Default judgment is never
automatic and the discretion of the Court must be
exercised in respect of this plaintiff as it would be
in respect of any other plaintiff. Therefore, there
appears to be no issue under section 15 of the
Charter.
I am therefore ordering that the statement of
defence submitted on October 7 be accepted for
filing, effective that date and that the application
of the plaintiff for default judgment be dismissed.
Because these proceedings were only brought
about as a result of the defendant's failure to file a
statement of defence on time, notwithstanding the
fact that he had almost three months in which to
prepare a defence, and considering that no evi
dence has been placed before me explaining this
delay, the defendant must pay costs with respect to
both applications.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.