Treat Other Counsel How You Wish to Be Treated: The Rules Versus the Golden Rule – Lexology

When a plaintiff serves a statement of claim, the Rules of Civil Procedure (the Rules) require that a defendant must serve a statement of defence within a prescribed time (usually 20 days), failing which the plaintiff can note the defendant in default and obtain default judgment. Default proceedings are a crucial mechanism for ensuring that defendants respond to claims and take them seriously.

The following is a situation that every plaintiff-side lawyer has been in before:

As counsel for the plaintiff, you have done everything right: you have courteously agreed to an extension and put in writing that no more extensions will be given. Counsel for the defendant did not heed your warning. Wouldnt you be completely within your rights under the Rules to note the defendant in default for failing to serve a defence in time?

So you go ahead and note the defendant in default.

According to Justice Myers in Strathmillan Financial Limited v. Teti, 2021 ONSC 7603, this isnt a grey area where there is room for professional discretion. Notwithstanding that the Rules allow for it, noting the defendant in default in these circumstances is wrong.

Strathmillan Financial Limited v. Teti

The plaintiff in this case sued the defendants for unpaid invoices.

Masters2 Decision

The plaintiff would not agree to set aside the noting in default. The defendants were required to have the noting in default set aside by a case management master, on a full motion. The master awarded $7,500 in costs against the plaintiff. The plaintiff sought leave to appeal the cost award (but not the decision to set aside the default), which is how the case came before Justice Myers.

Decision on Leave to Appeal Cost Award

An outrageous misuse of the default process under Rule 19 is how Justice Myers described the decision by plaintiffs counsel to note the defendants in default. He denied leave to appeal and ordered a further $6,000 in costs against the plaintiff.

Justice Myers went into detail regarding the responsibilities of counsel in these circumstances and what actions are, or more importantly are not, appropriate:

Advocates, and not the client, have the sole discretion to determine the accommodations to be granted to opposing counsel and litigants in all matters not directly affecting the merits of the cause or prejudicing the clients rights. Advocates should not accede to a clients demands that the advocate act in a discourteous or uncooperative manner.

Even if the client refuses the extension, absent actual prejudice, counsel must agree.

How Does This Affect How We Litigate a Case?

For starters, anyone who responds to the official looking letter described above with We will agree to X deadline, failing which we will take steps to note your client in default needs to revise their templates. The underlined words have no practical meaning and effective letter writing should not include making empty, meaningless threats. Based on Justice Myers comments, the response should say: failing which we will write to the court to request a case conference pursuant to Rule 50.13(1).

In cases where a delay creates real prejudice for the plaintiff, noting a party in default may not be as egregious. However, seeing as every plaintiffs counsel believes an action needs to be adjudicated immediately, the best course of action is likely still to request a case conference under Rules 50.13(1), but on an urgent basis.

This does create an opening for serious mischief on the part of a defendant who is participating in the action but doesnt deliver a defence. Counsel for the plaintiff is required to grant indulgences and extensions and does not have the ability to note a defendant in default. The plaintiff can request a case conference, but that request comes with its own delays before the case conference will be heard, particularly in a time where the court is backed up due to COVID-19.

Rule 57.01 sets out the factors in making a cost order and specifically provides that any conduct by a party to lengthen unnecessarily the duration of a proceeding should be considered when making a cost order. While Justice Myers determined that the demand from counsel for the plaintiff to justify why more time was needed was improper, that doesnt mean that a defendant will not be held accountable if there was in fact no justifiable excuse for the delay. In order to prevent defendants from abusing the law set out in Justice Myers decision, case management associate justices can hold defendants accountable for forcing the plaintiff to a case conference by imposing strict timelines for the action and making cost orders against defendants who make plaintiffs jump through these hoops unnecessarily.

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Treat Other Counsel How You Wish to Be Treated: The Rules Versus the Golden Rule - Lexology