Don't Be Bullied By Default

“Counsel, if I do not receive your client’s Statement of Defence by xxxx, 2022, I have instructions to note your client in default.”

This is a phrase most litigators have heard, or perhaps said themselves, more than once. This phrase is intended to provoke a reactionary response in your opponent and demonstrate to them, and your client, that you: 1) “mean business”, 2) that you will not allow the action to languish and 3) that you have the power to bend the opponents to your will. For some lawyers, threatening, and proceeding with default steps against a party who has been responsive to the action, but perhaps not responsive enough, is the mark of a so-called “fierce” and “zealous” litigator.

In addition, some lawyers believe that using the default mechanisms provided under Rule 19 of the Rules of Civil Procedure (“Rules”) in this manner provides a tactical advantage in the sense that it requires the opposing party to take additional, and sometimes costly steps, at the outset of the litigation, such as bringing a motion to set aside the noting in default. The hope, for some, is that this will result in fatigue and frustration at the outset and show the opponents just how difficult the litigation will be.

In other cases, the actions of counsel are driven by their client’s desire to take a hardline approach in the litigation and counsel are acting under the instructions of their client to deny any request for an extension of the delivery of pleadings. However, as the Courts have explained, doing so is both ill-advised and contrary to advocates’ duty to act with civility and professionalism. In the absence of actual prejudice to your client, the appropriate (and mutually beneficial) course of action is to grant brief extensions, if for no other reason than the fact that you may need an extension yourself at some other point in the litigation (see Strathmillan Financial Limited v. Teti, 2021 ONSC 7603 [Strathmillan] at para 20).  

Accordingly, despite the dread induced by this phrase on opposing parties and its effectiveness (on some occasions) to elicit the response you want, using default proceedings against an opposing party in this manner is improper, a breach of counsel’s duty of civility and professionalism, and will result only in a “technical” default that will in most cases be set aside with costs.

Nevertheless, for one reason or another, some lawyers continue to utter and act on the threat of default proceedings against parties that are engaged in the litigation and even represented by counsel. However, if opposing parties resist giving into to the threat, parties that use default proceedings in this manner will likely do so at their peril.

The Courts have opined on the use of technical defaults for tactical advantages for decades and have made their opinion on this issue clear, “using the default judgment rules for tactual [sic] advantage just sets the parties down the path of an unnecessary and costly motion to set aside the default. This is the opposite of ensuring the efficient, affordable, and fair resolution of the dispute.”  (see Strathmillan at para 5).

Recently, the Honourable Justice Meyers addressed the issue of technical and tactical defaults in Strathmillan Financial Limited v. Teti, 2021 ONSC 7603  (Strathmillan) as follows:

[1] Default proceedings under Rule 19 are not to be used for tactical purposes. Nobosoft Corporation v. No Borders, Inc.,  2007 ONCA 444 (CanLII) at para. 7 citing with approval para. 2 of the leading decision of Molloy J. in McNeill Electronics Ltd. v. American Sensors Electronics Inc. (1996), 5 C.P.C. (4th) 266 (Ont. Gen. Div.), reversed on other grounds,  1998 CanLII 17693 (ON CA).

[2] Default proceedings lie when a defendant does not participate in the lawsuit or when his pleadings have been struck out.

[3] When counsel are involved for both sides and are having a disagreement about pleadings, timing, or otherwise, it is not appropriate to take default proceedings to enforce the plaintiff’s position. There may be a technical default as described in the Rule. But the Rule is inapplicable in the circumstances.

[4] If counsel have a disagreement on process matters that they cannot sort out themselves despite reasonable efforts and compromise, a case conference is available under Rule 50.13 (1). This rule promotes settlement of issues in the interests of an efficient and affordable resolution of the action on its merits.

Furthermore, in Strathmillan, Justice Meyers confirmed that:

“…the decision to grant or withhold an accommodation to a colleague opposite is a decision for counsel. Section 47 of The Advocates’ Society’s  Principles of Civility and Professionalism for Advocates makes this clear: 47. 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 client’s rights. Advocates should not accede to a client’s demands that the advocate act in a discourteous or uncooperative manner.”

The Courts have also confirmed that it is inappropriate to take default steps against a defendant who has brought a motion to stay or strike under Rule 21. For example, in Barbieri v Queen in Right of Ontario (Ministry of Environment Parks and Conservation), 2019 ONSC 4475 [Barbieri], Master Jolley set aside the noting in default stating, “[t]he Vaughan Defendants had taken a step in the proceeding by serving their notice of motion to strike the statement of claim. It was not proper to note the Vaughan Defendants in default in the face of that notice of motion. The noting in default was irregular and improperly obtained and should be set aside on that basis.” (see Barbieri v. Queen in Right of Ontario (Ministry of Environment Parks and Conservation), 2019 ONSC 4475  at para 10).

Take-away:

1. 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 client’s rights (Section 47 of The Advocates’ Society’s  Principles of Civility and Professionalism for Advocates);
2. service of a notice of motion to strike or stay an action under Rule 21 constitutes a “step in the proceeding” and it is improper to note defendants in default after service of that notice of motion; and,
3. practically speaking, counsel should, in the absence of actual prejudice, grant extensions if for no other reason than that they may need one themselves.

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