Small Claims Court

2017                                                                              SCC No. 467588

IN THE SMALL CLAIMS COURT OF NOVA SCOTIA

Citation: Blue Chip Leasing Corporation v. 4K Properties Ltd., 2019 NSSM 74

 

BETWEEN:

 

BLUE CHIP LEASING CORPORATION

CLAIMANT

(RESPONDENT)

and

 

4K PROPERTIES LTD., LINDA KING AND ACHILLEUS KING

DEFENDANT

(APPLICANT)

 

DECISION

 

BEFORE:                     A. Robert Sampson, Q.C., Adjudicator

 

DATE OF HEARING:          Hearing held at Sydney, Nova Scotia on February 14, 2019

 

WRITTEN SUBMISSIONS:  

 

Applicant/Defendant:

(1)             Brief - filed March 4, 2019;

(2)             Rebuttal submissions and Book of Authorities – filed March 8, 2019.

(3)              

Respondent/Claimant:

(1)             Brief and Book of Authorities - filed February 12 and 14, 2019;

(2)             Supplementary Brief and Book of Authorities – filed March 6, 2019;  

(3)             Rebuttal submissions – filed March 11, 2019.

                   

DECISION RENDERED:     July 16, 2019

 

APPEARANCES:

For the Applicant/Defendant:         Counsel Christopher Conohan

For the Respondent/Claimant:        Counsel Dillon Trider

 

Witnesses:

For the Applicant/Defendant:

(1)             Mr. Archilleus King

(2)             Mrs. Linda King

(3)             Mr. Nash Brogan

 

For the Respondent/Claimant:

(1)             Mr. T.J. McKeough (subpoena)

 

 BY THE COURT:

1.                 This is an application to set aside a Quick Judgment pursuant to Section 23 (2) of the Small Claims Court Act, RSNS, 1989, C430 (as amended) (“the Act”). This Application was filed on December 4^th, 2018. The Quick Judgment Order sought to be set aside was issued by this court on September 20^th, 2018 awarding the Respondent/Claimant $25,433.95 inclusive of costs and service fees. The Application is supported by affidavits from Nash T. Brogan, former legal counsel for the Defendant(s), Linda King and Archilleus King, both Defendants. The Kings are spouses of each other and are the principal owners of the named Corporate Defendant, 4K Properties Ltd.

 

2.                 A formal hearing was held on February 14^th, 2019 lasting approximately seven hours. Although no formal transcript is available, extensive and detailed notes were taken from the evidence given. At the outset the court granted a motion by the Respondent/Claimant to exclude witnesses. This only affected T.J. McKeough who was under a subpoena, as the Kings were named Defendants and Mr. Brogan was first to take the stand.

 

3.                 Before providing a summary of the evidence received by the court arising from the hearing of the Application, having regard to the unusual and indeed concerning circumstances the evidence has revealed as it relates to the conduct of the Defendants’ former legal counsel, which forms the principal basis of the Defendants’ request for relief from this court, it is necessary to provide some overview of the history of this matter before the court.

 

4.                 At the outset the court is appreciative to both counsel for the organized manner in which their evidence and documents relating to each of their positions was presented to the court as well as their written submissions and authorities relating to the issues at hand. In rendering this decision and having regard to the evidence received, the court has remained focused on the statutory provisions and ultimately the legal test to be applied in considering an Application under Section 23(2) of the Act. However, having regard to the evidence presented, the court has determined it both necessary and appropriate that it review and take into account the history of this file matter, the passage of time and notably representations and exchanges between counsel as well as certain representations made to the court for purposes of assessing issues of credibility as it relates to the evidence advanced at the hearing in connection with this Application.

 

BACKGROUND

          

5.                 This claim originated by way of Notice of Claim filed on August 30, 2017. It was subsequently amended by the Respondent/Claimant at the request of the court on February 26, 2018. The claim arises out of a contract dispute (breach of Lease) between the parties, the details of which are set forth in the claim. No Defence has ever been filed in response to the original claim or Amended Claim.

 

6.                 Subsequent to the initial Claim being filed back in August 2017, three separate applications for Quick Judgment have been filed with the court. As required by the Regulations under the Act, form 6 representing an “Affidavit in Proof of Application” accompanied each of the applications and included a number of exhibits in support of the requirements of an Application for a Quick Judgment. Included in these exhibits were a series of email exchanges, leading up to and subsequent to the original Claim being filed, between Mr. D. Trider, legal counsel on behalf of the Respondent/Claimant and initially with solicitor Nash Brogan and later with solicitor T.J. McKeough, either on behalf of Mr. Brogan and/or on his own accord as counsel to the Defendants, both corresponding under the law firm banner of “Brogan McKeough”.  Many of these same documents attached to the above-noted Affidavit of Proof of Application(s) as well as additional ones were included in “Exhibit 1” filed with the court in connection with the present Application and aid in providing a more certain recount of the history of events that transpired in connection with the original Claim leading to this Application now before the court.

 

7.                 Exhibit 1 was tendered by the Respondent/Claimant. Tabs 1 to 7 contain a series of correspondence dating from January 2015 to October 2016 between the Respondent/Claimant and Great American Insurance Group (“Great American”), each copied to Archilleus King, relating to a potential claim arising from a fire loss of leased equipment in the possession of the Applicant/Defendant which occurred on November 15, 2014. The documents on their face suggest the equipment was owned by the Respondent/Claimant, Blue Chip Leasing, and under lease to the named Applicant/Defendants at the time of loss. Great American held the insurance on the equipment through a contract of insurance with the Respondent/Claimant. The principal purpose of this series of correspondence appears to represent Great American’s efforts to advise the Respondent/Claimant and the Lessee (Applicant/Defendants) of their obligations under the insurance policy and lease to cooperate with the insurance company’s investigation of the loss and provide required sworn statements, proof of loss and so forth. The last letter (Exhibit 1, Tab 7, October 2016) confirms Great American’s denial of the loss of claim based on the fact that they received no contact or cooperation from the Applicant/Defendants to allow them to complete their investigation.

 

8.                 Exhibit 1, Tab 8 contains a letter dated March 13, 2017 wherein Nash Brogan corresponds with the Respondent/Claimant confirming he is representing the Applicant/Defendants, 4 K Properties and Linda King.  Further Exhibit 1, Tab 8 though to Tab 17 represents continuous communication exchanges between Mr. Trider, legal counsel on behalf of the Respondent/Claimant, and Mr. Brogan. Mr. Brogan’s initial letters are noted as “cc” to his client. Mr. Brogan advised the Respondent/Claimant that he had instructed his client to stop making lease payments on the equipment and request a refund on behalf of Applicant/Defendant for lease payments that continued to be made following the loss. Tab 18 of Exhibit 1 appears to represent Mr. McKeough’s introduction into this claim matter where he sends an email (from Brogan Law email address) in response to an earlier letter from Mr. Trider to Mr. Brogan (Exhibit 1, Tab 17) which included a copy of the issued claim and asked if he is authorized to accept service. Mr. McKeough responds by email to Mr. Trider on September 7, 2017 stating:

 

 

         “I have spoken to Mr. Brogan regarding the Small Claims Court matter.

He advises he is not retained on the small claims court matter and will not accept service….. “

 

9.                 The court file records confirm that the named Applicant/Defendants were each personally served the standard Form 1 - Small Claims Court Claim on September 9^th, 2017 which confirmed their requirement to file a Defence within 20 days. The matter was scheduled for hearing on November 15, 2017.

 

10.            Tab 21 of Exhibit 1 contains an email dated October 16^th, 2017 from T.J. McKeough to Mr. Trider stating:

“Mr. Brogan has been retained to deal with the small claims court matter.

He will have a Defence to you by the end of the week. He asks that you do not take any steps to obtain a Quick Judgment on the interim”.

 

11.            Again with reference to Exhibit 1, Tab 19, it contains a series of email exchanges between Mr. Trider and T.J. McKeough. On November 1^st, Mr. Trider sent a brief email stating the following:

“The deadline for filing of your clients Defence is long past. The hearing is scheduled for November 15^th, 2017. I ask that you immediately advise when the Defence will be filed.”

 

12.            The immediate response from Mr. McKeough was:

“The Defence will be filed this week and I will forward to you. I can advise that Mr. Brogan will be out of the area on November 15, 2017 though”.

 

13.            Mr. Trider immediately responds acknowledging the message and noting that:

 “This would have been good to know when Mr. Brogan was re-retained; I cannot help but feel as though Mr. Brogan and/or his clients are employing delay tactics.”

 

The matter was subsequently adjourned to February 28^th, 2018. None of the emails referenced between counsel indicate they were copied to the Applicants personally.

 

14.            Mr. Trider sent further emails, one on November 7^th to T.J. McKeough asking if the Defence had been filed and a similar email again on January 8, 2018 (see Exhibit 1, Tab 21).  No Defence was filed.

 

15.            Exhibit 1, Tab 22 contains correspondence from Mr. Trider dated January 26, 2018 addressed to Mr. Brogan (sent by courier) enclosing a filed copy of the Respondent/Claimant’s Application for Quick Judgment.  The evidence was that no acknowledgment or response was received from Mr. Brogan or Mr. McKeough nor was any Defence filed.

 

16.            The court file confirms that on February 15^th, 2018 counsel for the Respondent/Claimant, Mr. Trider, wrote to the court noting two items of clarification in connection with the original claim and Application for Quick Judgment then filed with the court. The first related to an error on the front page of the Form 1 Claim where the amount claimed was stated to be $5275.05 when in fact in the details in the Statement that was attached to the claim form it set forth a claim amount of $25000.00. As previously noted the original Claim/Form 1 was served directly upon the named Defendants. The exchange of correspondence between counsel referred to above in Exhibit 1 were contained in the “Affidavit of Proof of Application”, and while the court notes the original claim was sent by email to Mr. Brogan back in September 6, 2017, he subsequently confirmed to Mr. Trider that he (Mr. Brogan) was not retained on the Small Claims Court matter. The affidavit of proof of application did contain copies of the various email/letter exchanges between counsel leading up to this first Application for Quick Judgment, however, other than in the claim document itself, no reference to the principal amount of the claim was acknowledged or re-confirmed. Upon reviewing the initial Application for Quick Judgment by the court, since no Defence had been filed and in light of what the court considered to be a significant conflict in the amount being claimed ($5227.05 v. $25000) there was no way for the court to be certain as to what the Defendants believed the actual amount of the claim was against them. The second request was to amend the claim to include the cost of the court filing fee and service costs.  As a result of this conflict as to the amount of the claim as set forth on page one of the claim form, the court directed that an amended Form 1 be filed with the correct amount set forth in Form 1 and re-served on the parties. The first application for Quick Judgment then became moot.

 

17.            It is worthy of note that Mr. McKeough did appear alone on the re-scheduled hearing date of February 28, 2018 and was made aware of this new development and advised that a new hearing date would be set and he would be notified. No Defence had been filed.

 

18.            The court records confirm that an Amended Claim was filed with the court on February 26, 2018 and re-served personally on the Defendants on March 1^st, 2018. In addition, Exhibit 1, tab 23 tendered by the Respondent/Claimant confirms that notice of the Amended Claim was sent by courier on March 1^st, 2018 addressed to Mr. T.J. McKeough at Brogan McKeough Law , George Street, Sydney. The parcel tracking receipt confirms it was delivered on March 2, 2018 and signed for by a K. Wincey. The new hearing date was scheduled for June 20^th, 2018.

 

19.            The 20 days following service of the Amended Claim had expired and still no Defence had been filed. On April 3, 2018 a second Application for Quick Judgment was filed by the Respondent/Claimant.

 

20.            During this period the Small Claims Court or at least the Sydney Court was going through somewhat of a policy change insofar as the timing of dealing with Applications for Quick Judgments. Traditionally the practice had been that upon receipt of an Application for Quick Judgment the court would hold off reviewing and issuing a decision until the date of the scheduled hearing.  In more recent times the suggested policy for the court was to deal with a Quick Judgment Application immediately upon receipt and if no Defence has been filed and the Adjudicator found the application documents to be in order, to issue the Judgment. In this particular case, during this transition the court determined to wait until the scheduled hearing date of June 20^th.

 

21.            The court file confirms that some days prior to the June 20, 2018 scheduled hearing date, the Respondent/Claimant’s counsel contacted the court to inquire whether there was a need for either him or a representative to travel from Halifax to be present or alternatively represented by phone. Having regard to the fact that no Defence had been filed at that point in time (only a few days before the hearing date) the Respondent/Claimant’s counsel was advised by the court clerk that he would not have to be present and if no one showed up the Application would be granted. If someone did show up, subject to having a reasonable excuse, the matter would be re-scheduled.

 

22.            As it turns out, solicitor McKeough did show up (alone) and made representations to the court asking that he be afforded time to file a Defence and that the matter be re-scheduled. The court accepted Mr. McKeough’s submission providing information in his capacity as counsel for the Defendants and as an Officer of the court. The court’s decision to not grant the Application for Quick Judgment and the reasons for doing so are set forth in the court’s written decision dated July 30^th, 2018 (see Exhibit 1, Tab 24). However, for the purposes of dealing with the Application now before this court it needs to be noted, as reflected in the written decision, that the principal reason for not granting the Quick Judgment Application on June 20^th, 2018 was directly as a result of the representations made by Mr. McKeough stating that he had not been provided any notice of the scheduled hearing on June 20^th and had only learned of it two days prior (Monday, June 18^th) from his clients when they attended at his office to inquire about the scheduled hearing on June 20^th, noting they had not heard from him. Further on this front, the court accepted the representations made by Mr. McKeough to the court where he stated that upon learning of the scheduled Court hearing he immediately contacted Mr. Trider and stated to the court that he had been advised by him “that he was not entitled to notice”. The court specifically questioned him on this point twice and his position remained the same that he had not received notice of the hearing.  The court reserved its decision. The relevance of noting this will become clearer upon review of the testimony evidence and exhibits given on this Application and ultimately the need for the court to assess issues of credibility in reaching its determination as to whether the Defendant has a reasonable excuse.

 

23.            The court acknowledges that at the time of Mr. McKeough’s appearance on June 20^th, near the conclusion he offered to file a Defence the following day however the court had reserved its decision and did not wish to prejudice itself or mislead the Defendant Counsel as to what the outcome may be.  Therefore, it directed that he hold off until the court made its determination on the Application for Quick Judgment.

 

24.            Following the court’s determination by written decision dated July 30^th, 2018 not to grant the Respondent/Claimant’s Application for Quick Judgment, the parties were immediately advised and notice was sent from the court to each counsel advising of the new court date of September 12, 2018. The concluding paragraph of the court’s July 30^th decision bears repeating as follows:

 

“The Court therefore orders that the Application by the Claimant for Quick Judgement shall not be granted and this matter will be assigned a new hearing date by the Court forthwith. The Court further directs, relying on Mr. McKeough’s submissions that he is counsel for the Defendants, that notice of the new hearing date shall be provided by registered mail or personal service from the Sherriff’s office to both legal counsel and upon receipt the Defendant shall have the standard 20 days to file a formal defence.”

 

25.            Upon the court’s direction a copy of the new hearing notice was personally served by the Sherriff on Mr. McKeough and service was effected, as confirmed by affidavit in the court file, on August 16^th, 2018. Therefore a new 20-day period for filing a Defence commenced on this date.

 

26.            It is also worthy of note, the relevance of which will become clearer later in this decision, that following the issuance of the court’s decision (July 30^th) on the second application for Quick Judgment, Mr. Trider wrote a lengthy letter to the court responding to the reasoning adopted by the court to not award the Quick Judgment principally based on the representations advanced by Mr. McKeough in Court that he had not received any notice of the new hearing date of June 20^th and further the suggestion that Mr. Trider advised him in their telephone conversation two days prior “that he was not entitled to notice”. Clearly, Mr. Trider was personally offended by these representations which he stated were false. He confirmed that his reference was regarding his Application for Quick Judgment only. As previously noted, while the Defendants were personally re-served the Amended Claim and still no Defence had been filed, included with this correspondence to the court (see Exhibit 1, Tab 27) was documentation including a letter from Mr. Trider’s office which had been sent by courier to Mr. McKeough dated March 1^st, 2018 enclosing a copy of the amended Notice of Claim which confirmed the new scheduled hearing date of June 20, 2018. Also included was the tracking receipt confirming that the letter was received by Mr. McKeough’s office on March 2^nd, having been signed for by K. Wincey who had been his main office assistant.

 

27.            In response to this letter, Mr. McKeough responded by email to Mr. Trider and copied the same to the court. In his letter he does not in any way attempt to clarify or amend any of the representations he had made to the court on June 20^th. Rather he states:

“I am shocked at this correspondence. If you want to challenge my credibility file an appeal and swear and affidavit denying what was said….”  

 

And further:

           

“What I relayed to the Court was wholly accurate and had you shown up you would have seen Mr. Sampson dedicated a substantial amount of time to the matter and essentially cross examine me on my version of events”………

 

28.            The parties subsequently agreed to a revised hearing date of November 21^st, 2018. The court file confirms that further written notice from the court was sent to both counsel by registered mail on September 12^th, 2018 confirming this new date. At this point no Defence was filed. The court file further confirms that the court’s registered letter was addressed to T.J. McKeough and received at his law office (Brogan McKeough), George Street, Sydney on September 14^th. It was signed for by a K. Wincey who was later identified through evidence at the hearing as the main office assistant at the Brogan McKeough Law office. Included with the above-noted notice, although somewhat unusual but in keeping with the practice of the Small Claims Court to assist the parties in moving matters along and in this instance to make the parties directly aware of the court’s intended practice to immediately deal with Applications for Quick Judgments, an internal memo from the Adjudicator to the Clerk of the court, dated September 10, 2018 was prepared. This was tendered in these proceeding as Exhibit 6. The clerk was directed to include a copy, and it was included, in the court’s notice dated September 10th, sent by registered mail to both counsel advising of the new court date. Included in that memo was the following statement :

 

“Further, I note as of this date no Defence has been filed in spite of the direction I had provided to Defence Counsel in my recent decision responding to the Applicant’s request for a Quick Judgement. Therefore, with this re-scheduled date now set and given that the 20 day deadline as set out in my Order has now expired, if no Defence is filed and I receive a further request for a Quick Judgement (based on earlier application documents filed with the court) it would be my intention to deal with such application immediately.”

 

29.            On September 17^th the court received a further Application for Quick Judgment from the Respondent/Claimant. There being no Defence filed and the Application found to be in order, the court issued a Quick Judgment Order against the Applicant/Defendant dated September 20^th, 2018. Subsequently, a Certificate of Judgment and Execution Order were issued by the court on September 27^th, 2018. The current Application before the court was filed on December 4, 2018 by Linda King on behalf of the Defendants.

 

SUMMARY OF EVIDENCE ON APPLICATION

 

30.            The foundation of this Application was supported by three Affidavits given to the court. Solicitor Nash T. Brogan (Exhibit 2) identifying himself as Solicitor for the Applicant/Defendant, Linda King (Exhibit 3), Applicant/Defendant, and Archilleus King (Exhibit 4), Defendant.  Each were cross-examined.

 

31.            At the outset of the hearing counsel for the Respondent/Claimant, Mr. Trider, advanced the position that the court ought to look at the complete court file to make a determination as to whether they (Applicant/Defendant) satisfied the requirement of having a reasonable excuse for not having filed a Defence.  Specifically, he made reference to an email he recently received from Mr. McKeough dated November 27, 2018, found at Tab 31 of Exhibit 1 which bears repeating as follows:

 

Dillon: 

“It is my understanding that Nash Brogan is filing a motion to set aside your judgment.  Again, he purposely delayed this case to avoid the clients testifying and jeopardizing the main insurance claim.  You are aware yourself that this was needlessly delayed, he sent you documents that did not make sense and would not set up a statement for the clients.

He was supposed to a file a Defence and Counterclaim and then when he did not he tried to have me pay for the judgment myself out of the proceeds from the main insurance action.  I have follow up emails to this effect.  I will gladly swear an Affidavit to testify to what actually happened with this case.” 

TJ McKeough

 

32.            In addition, counsel for the Respondent/Claimant also submitted that in assessing this Application the court should also determine whether there is an arguable defence in response to the claim and raised issues of prejudice to the Respondent/Claimant should the Application be granted.  Finally, on a preliminary basis, counsel for both parties agreed on a motion to exclude which, as previously noted, only affected Mr. McKeough. 

 

33.            At the outset, the Respondent/Claimant’s exhibit book was tendered to the court as Exhibit 1.  It contained 31 separate documents in support of the Respondent/Claimant’s position on the application before the court.

 

EVIDENCE – MR. NASH BROGAN

 

34.            Mr. Brogan confirmed his Affidavit before the court and confirmed no errors or omissions.  Upon cross-examination he confirmed he was still engaged by the Defendants, 4K Properties and the principal owners, Linda King and Archilleus King, to represent them in matters arising from a fire loss which had occurred at their place of business back in 2014.  He confirmed he had filed a formal claim on their behalf against their insurers, Intact Insurance (“Intact”). 

 

35.            Mr. Brogan confirmed that Exhibit 1, Tab 8 represented correspondence from his office under the firm name – Brogan McKeough – and was a letter he had dictated to the Respondent/Claimant and signed by Mr. McKeough on his behalf.  This represented the start of their involvement with the claim before the court.  Mr. Brogan indicated it was not unusual for him to have dictated correspondence which Mr. McKeough would sign on his behalf. 

 

36.            Mr. Brogan was referenced to Exhibit 1, Tabs 1 through 7, which contained a series of letters dating from January 2015 through to October 2016 sent from Great American to the Respondent/Claimant and the Defendants and was asked whether he had been made aware of this series of correspondence from his clients. Mr. Brogan confirmed in 2017 he was only made aware by his clients of the December 1, 2015 (Exhibit 1, Tab 3) letter which he referenced under Exhibit 1, Tab 8 in his initial correspondence to the Respondent/Claimant. At that time he advised of his representation, confirmed he was instructing his clients to stop making lease payments and requested a refund of the lease payments made since the date of the fire. 

 

37.            Mr. Brogan testified that he was aware there was a denial of coverage by Great American which held insurance on the equipment owned by the Respondent/Claimant.  The resulting effect of this was that the Respondent/Claimant initially maintained the position that the Applicant/Defendant remained responsible under the terms of their lease arrangement with the Respondent/Claimant to continue to make the lease payments because of their failure to cooperate with Great American in connection with their effort to investigate the claim.

 

38.            Mr. Brogan identified the document under Tab 9, Exhibit 1, and confirmed it represented a demand payment advanced by the Respondent/Claimant against the Applicant/Defendant for full payment under the lease which represented a total owing at that point in time (May 2017) of $32,936.50. 

 

39.            Mr. Brogan could not confirm that he actually saw the final demand letter (May 2017-Exhibit 1, Tab 9) but acknowledged that he likely would have been aware of it.

 

40.            Mr. Brogan confirmed that he had been retained by the Kings (Applicant/Defendants) at the outset and remained throughout. 

 

41.            Mr. Brogan acknowledged having been contacted back in July 2017 by Dillon Trider, counsel for the Respondent/Claimant and thereafter his office, either by him or through Mr. McKeough, and began corresponding directly with Mr. Trider on behalf of the Applicant/Defendant.

 

42.            To assist in fully understanding and taking into context the evidence received by the court from both Mr. Brogan and Mr. McKeough, it may be helpful to provide the following background summary.  On or about August 2013 the Applicant/Defendants entered into a lease with the Respondent/Claimant for several pieces of equipment associated with the operation of their business.  On or about November 15, 2014 a loss occurred by fire at the Applicant/Defendants’ property and the equipment under lease was destroyed along with the Applicant/Defendants’ building and other business assets.  The evidence confirms at the time the Applicant/Defendants’ insurance policy associated with the operation of its business, assets, etc., was with Intact Insurance.  The evidence further confirmed that as it pertained to the leased equipment, the Respondent/Claimant held insurance with Great American which covered the equipment under lease to the Applicant/Defendants.  The evidence further confirms that a portion of the monthly lease payments made by the Applicant/Defendants included a specific amount paid towards the cost of this insurance.  Finally, the evidence confirms that following the November 2014 loss, particularly starting in January 2015, there were a series of repeated correspondence from Great American to the Respondent/Claimant specifically relating to the loss of the leased equipment, each copied to the Applicant/Defendants, repeatedly advising that they were unable to receive any response from the Applicant/Defendants and in particular formal statements which the insurance company represented that they were entitled to receive under the terms of the Insurance Policy as part of the ordinary course of this investigation.  These requests were tendered to the court under Exhibit 1, Tab 1 to 7 and continue through to late October 2016.

 

43.            The evidence confirmed that Mr. Brogan was initially engaged by the Applicant/Defendants to represent them in advancing a claim against their principal insurer, Intact Insurance Company, for losses they sustained as a result of the fire. Mr. Brogan’s evidence confirmed that the loss of various equipment that had been under lease with the Respondent/Claimant was included in the initial claim advanced against Intact.  The evidence is unclear as to when Mr. Brogan was initially engaged on the Intact matter, however, is certain that as of March 2017 he became involved on behalf of the Applicant/Defendants responding to the demands advanced by the Respondent/Claimant.

 

44.            The evidence is undisputed that in March 2017 through to some point in the summer/fall of 2018, Mr. Brogan and Mr. McKeough operated their individual practice of law under the firm label “Brogan McKeough”. Their office letterhead/stationary also references “Brogan Law Inc.”, however, no evidence was provided as to the shareholders of this corporation.  Both Mr. Brogan and Mr. McKeough were practicing members of the Nova Scotia Barristers’ Society at all material times and operated under this firm name.

 

45.            Mr. Brogan’s evidence confirmed that in the process of negotiating a settlement of their clients’ claim against Intact, portions of the claim associated with the equipment under lease were removed for settlement purposes.  Mr. Brogan further confirmed that in March 2018 the claim against Intact Insurance was effectively settled although no details were provided.

 

46.            Mr. Brogan acknowledged having received the original claim advanced by the Respondent/Claimant through their counsel, Mr. Trider, by electronic email dated September 6, 2017.  He further noted and confirmed that he reviewed Schedule “A” attached to the claim at some point and therefore would have been aware of the intended claim in the amount of $25,000.00 although he couldn’t say when that may have been brought to his attention.  Mr. Brogan confirmed that his client’s instructions from the outset were to defend the claim together with advancing a counterclaim for the return of the lease payments that had been made by the Applicant/Defendants following the date of the original loss.

 

47.            Mr. Brogan acknowledged his exchange of correspondence with Mr. Trider and under Exhibit 1, Tab 18 confirmed he instructed Mr. McKeough to respond on their behalf  advising that they would not accept service and that he should proceed to serve the Applicant/Defendants personally. 

 

48.            Mr. Brogan responded to questions surrounding an exchange of emails between Brogan McKeough and Mr. Trider regarding the subject claim and confirmed as at November 1, 2017 they were “re-retained” and another email of the same date was sent by Mr. McKeough indicating a Defence would be filed within a week.  As previously noted, Mr. Trider during this email exchange expressed his sense that possibly Mr. Brogan and/or his clients were employing delay tactics.  Mr. Brogan testified that he could not readily recall reviewing this email exchange.  He noted his practice was to review his email account every day however noted that he later came to learn that Mr. McKeough had been deleting some very important emails from the general office email account.  Mr. Brogan confirmed that the claim now before the court had nothing to do with the Intact Insurance claim as previously noted.

 

49.            Mr. Brogan’s evidence confirmed that he was under the impression that a Defence and Counterclaim had been filed and that he had not been aware of any of the requests advanced by the Respondent/Claimant’s counsel to “file a Defence”. 

 

50.            Mr. Brogan referenced a document (email) under Tab 20, Exhibit 1, which was an email exchange between Mr. Trider and Mr. McKeough. The first email was directed to Mr. Brogan and sent to their general office email account noted as broganlaw@bellaliant.com.  In what appears to be a response to that email, on November 3^rd, 2017 Mr. McKeough responds under a new email tj@broganlaw.ca.  In this exchange, Mr. McKeough states “….sorry I must have missed your email, this is my email, easier to get me on this”. 

 

51.            Mr. Brogan’s evidence to this point in time (November 2017) was that he later came to learn that Mr. McKeough was using his own email address and therefore Mr. Brogan was not seeing any further email exchanges and he had been under the belief that a Defence and Counterclaim had been filed.  Mr. Brogan confirmed that he had been aware, through adjournments, that the matter had been set down to be heard on February 28, 2018 and later adjourned to a new hearing date of June 20, 2018. 

 

52.            Exhibit 1, Tab 22 confirmed a letter dated January 26, 2018 from Mr. Trider addressed to Mr. Brogan and noted as containing a copy of the first Application for Quick Judgment. Mr. Brogan confirmed that at no time was he ever aware that there were any applications for a Quick Judgment advanced by the Respondent/Claimant.

 

53.            Mr. Brogan’s evidence was that he was assured through discussions with his associate, Mr. McKeough, that a Defence and Counterclaim had been prepared and filed.  Further, Mr. Brogan confirmed that their firm practice, as between he and Mr. McKeough for the period in which they practiced together, was such that he was the “trial lawyer” so to speak. “I do the trial” he stated and deal with witness preparations and attendance at trial.  Mr. Brogan stated  Mr. McKeough’s role in litigation file matters which they jointly worked on was to ensure that the necessary preparation work was completed in connection with the required pleadings, filings, court memos, research and the like in preparation for the actual hearing.

 

54.            Mr. Brogan’s evidence was that on or about June 15, 2018, which was a Friday, he had contacted Mr. McKeough and requested that he drop the file off to his home as he anticipated working on the matter over the weekend in preparation of the anticipated trial date of June 20, 2018. A series of text messages exchanged between Mr. McKeough and Mr. Brogan were tendered to the court under Exhibit 5. The exchange commenced on the afternoon of June 15, 2018 confirming the request by Mr. Brogan to have Mr. McKeough bring the 4K file materials to his home in anticipation of him meeting with the clients on Sunday, June 18, 2018.

 

55.            Mr. Brogan’s evidence, as confirmed by the text message exchange (Exhibit 5), indicated that he had received the file materials and on Sunday morning, upon reviewing the same, he noted that there was no copy of the Defence and Counterclaim in the materials. He sent a further text to Mr. McKeough on June 17^th, 2018 at 6:16 am stating “where is our Defence and counterclaim for payments made on 4K file”. Mr. McKeough in his response at 10:40 am confirmed that “it should be in the file as he had been looking at it the previous day and that it was handwritten on Form 1”.  He went on to set out in his text a summary of the points that were in the Defence.  In Mr. Brogan’s text response at 10:55 am he notes he will assume Mr. McKeough’s summary is accurate, and goes on to confirm a series of further text exchanges relating to what Mr. Brogan expected to have been included in the Defence as it relates to insurance matters.  This aforesaid text exchange appeared to occur throughout the day on Sunday, June 17, 2018 concluding at approximately 6:00 pm.

 

56.            Mr. Brogan’s initial recollection given in evidence was that he had received a call from Mr. McKeough at some point on that Sunday evening (June 17^th) stating the claim had been abandoned and the Respondent/Claimant was not pursuing the matter and it was over. Later in his evidence he revisited this point and stated the call he had received from Mr. McKeough may have been the following Monday evening (June 18^th). He could not be certain as to exactly which day but was certain of what he was advised by Mr. McKeough about the withdrawal of the claim by the Respondent/Claimant.

 

57.            Mr. Brogan confirmed in his evidence that he believed the Respondent/Claimant was entitled to rely on the fact that Mr. McKeough was on the file representing the clients.  He re-confirmed the fact that he was never made aware of any applications for Quick Judgment which the evidence confirmed there had been three. 

 

58.            Mr. Brogan identified his knowledge of the letter under Exhibit 1, Tab 23 from Mr. Trider acknowledging that an amended Statement of Claim had been filed under the direction of the court and a new hearing date had been set for June 20^th.  He noted “it was in our office calendar”. 

 

59.            Mr. Brogan’s evidence was after he had spoken with Mr. McKeough on either Sunday, (June 17, 2018) or Monday evening (June 18^th) and was advised that the matter was abandoned by the Respondent/Claimant, his recollection was that he had contacted the clients to advise them of the same and there was no need to attend court on June 20^th.

 

60.            Mr. Brogan was referenced Exhibit 1, Tab 25 which was a letter Mr. Trider had written to the court following the court’s July 30^th decision in response to the second application for Quick Judgment.  Mr. Brogan indicated that the first time he had reviewed this letter was in November 2018.  He noted that in late fall, upon learning from the Applicant/Defendants that a judgment had been registered in the Land Registry, he requested to receive the file from Mr. McKeough and he was advised that he lost the file. 

 

61.            Again Mr. Brogan was also referred to Exhibit 1, Tab 26 which was a further response by Mr. McKeough to Mr. Trider and copied to the court  (see excerpt, para. 27 of this Decision). Mr. Brogan confirmed that he was not aware of this or the second application for Quick Judgment scheduled for June 20th; nor the July 30^th decision of the court arising from the second application for Quick Judgment; nor the subsequent exchange between Mr. Trider and Mr. McKeough; nor the subsequent third application for a Quick Judgment (see Exhibit 1/Tab 30).  He maintained he was “shocked” when he learned that this matter was going on based on the information he was provided from Mr. McKeough on or about June 17/18 that the claim had been abandoned by the Respondent/Claimant. 

 

62.            Finally, with specific reference to Exhibit 1, Tab 31, Mr. Brogan reviewed an email from Mr. McKeough to Mr. Trider which has been reproduced earlier in this decision at paragraph 31. Mr. Brogan’s evidence was that he believed Mr. McKeough purposely misled the court and the clients and further confirmed that he personally had no reason to mislead anyone.

 

63.            On re-direct Mr. Brogan confirmed that the main insurance claim with Intact had been settled in March 2018 and that Mr. McKeough would have been aware of the details as he would have done the follow up in terms of settlement.  He further confirmed that in the fall of 2018 he recalls that he was not getting emails on a number of files and that specifically he told Mr. McKeough that he wanted to review “all” emails. 

 

64.            Mr. Brogan confirmed that he terminated Mr. McKeough with cause from his position as an associate at his law practice on or about November 11, 2018 and further that it was in and around this time that he found out Mr. McKeough had been operating a separate email account in connection with certain file matters.

 

65.            Further, on cross-examination Mr. Brogan acknowledged that he would routinely travel to Florida during the winter months at which time he continued to monitor file matters through their office email account and that Mr. McKeough continued to manage file matters in conjunction with him.

 

66.            Further on re-direct Mr. Brogan confirmed that when Mr. McKeough indicated “he lost the file” he was talking about the physical file.  He further confirmed that on June 15, 2017, in preparation of the June 20^th hearing, he had gone on to what he referred to as a “drop box” which their firm generally used to electronically store individual file information and he was not able to see anything in connection with this file matter.  He confirmed that when he left the firm Mr. McKeough took the information from their drop box in relation to a number of files. 

 

67.            The court questioned Mr. Brogan as to his recollection of precisely when he received the call from Mr. McKeough advising that the Respondent/Claimant had abandoned the matter.  His initial evidence was that he had been contacted by Mr. McKeough on Sunday evening, June 17^th advising that the matter had been abandoned. He later questioned himself as to whether this call occurred on the Sunday or Monday evening. He was however certain in his evidence that it was as a result of the call he received from Mr. McKeough that he immediately called the client to advise. The court further inquired as to the status of the counterclaim and Mr. Brogan advised that his clients had agreed to abandon the same and further that when he had received the call from Mr. McKeough he could not recall there being any discussion surrounding the counterclaim but only that the claim had been withdrawn.

 

EVIDENCE – MRS. LINDA KING

 

68.            Mrs. King was sworn in and confirmed her Affidavit to be accurate.  On cross-examination she confirmed she was the registered agent for the Corporate Defendant, 4K, and further acknowledged that she had been served notice of the original and Amended Claim documents and hearing dates both personally and on behalf of the Company.

 

69.            Mrs. King was referenced to Exhibit 1, Tabs 1 through 7, being letters originally generated by Great American to the Respondent/Claimant which she confirmed they had been copied on and received. Mrs. King further confirmed that Exhibit 1, Tab 8 correspondence represents the approximate time (March 2017) in which they determined the need to engage Mr. Brogan in connection with the matter before the court.

 

70.            She testified that they believed they had a claim against the Respondent/Claimant for continued lease payments that they had been paying after the fire loss and that when she attended at Brogan McKeough law office and met with Mr. McKeough he confirmed to them (she and her husband) that the claim was being taken care of and that a Defence had been filed.  She further confirmed that it was her intention from the beginning to file a counterclaim which principally represented their overpayment on lease payments after the loss. 

 

71.            She testified that in the fall of 2018, after receiving the letter confirming that a judgment had been issued against them she again went to see Mr. McKeough and he simply confirmed to her that she should not be worried.  She further testified that she recalled in June receiving a phone call from Mr. Brogan confirming that the claim had been withdrawn. She could not recall exactly when that call took place.  She recalls Mr. McKeough at some point confirming to her the matter was over…”don’t worry”. 

 

72.            She testified that in late fall 2018 she received a further letter which confirmed a judgment had been registered on her property and again she took it over to Mr. Brogan directly and at that point in time she recalled him acting surprised and this indicated that obviously the matter had not gone away.

 

73.            Mrs. King’s evidence was that she recalls seeing Mr. McKeough a few days before June 20, 2018 and asking him what is going on as she had been previously aware of the hearing date set for June 20, 2018.  She confirmed that Mr. McKeough had told her “not to worry about it”.  She further testified that at no time during this discussion did Mr. McKeough indicate that he had not been aware of the June 20^th court date.

 

74.            Mrs. King was asked about the fact that she had been served with the amended Notice of Action personally which confirmed the June 20^th court date and whether she contacted either Mr. Brogan or Mr. McKeough to advise she had been personally served.  In this regard, in conflict with her affidavit evidence, she confirmed she had not taken a copy over to them as she assumed that they would have also received a copy and therefore assumed that they too would be aware of the June 20^th court date.

 

EVIDENCE – MR. ARCHILLEUS KING

 

75.            Mr. King’s affidavit was tendered to the court and confirmed to be accurate.  He confirmed that he is the husband of Linda King and involved with the corporate Defendant, 4K Properties Ltd.

 

76.            Mr. King acknowledged that he had been personally served with the original claim in 2017 and later the Amended Claim back in early 2018.  He confirmed his practice was that generally any legal papers he had received he would take to Mr. Brogan’s office. He specifically recalled going into the Brogan McKeough office and giving the papers to Karen Wincey (Office Secretary) who confirmed she would give them to Mr. Brogan or Mr. McKeough.  He recalls later asking Ms. Wincey what was going on and she confirmed to him that Mr. McKeough was looking after it.  He recalls this discussion took place approximately one week before the June 20, 2018 scheduled hearing. 

 

77.            Mr. King acknowledged he was aware of the counterclaim that was to be filed in response to this claim.  Mr. King indicated that he normally deals with these matters as his wife tends to get worked up and anxious.  Mr. King’s evidence was that he recalls attending at the Brogan McKeough law office on the Monday (June 18, 2018) prior to the scheduled trial date as at that point in time they had not heard from anyone and they were upset.  His evidence was that when they were speaking with Mr. Brogan’s secretary, Mr. McKeough had come out of his office inquiring as to what’s going on.  He told Mr. McKeough “I’m dealing with Nash not Mr. McKeough”.  He confirmed that he had spoken with Mr. Brogan previously about this concern regarding lack of communication regarding the matter before the court.  He further confirmed that Mr. McKeough said “don’t worry, it’s being looked after”.

 

78.            Finally, he confirmed that when he finished speaking with Mr. McKeough on June 18^th he still believed he had to go to court on June 20^th. 

 

79.            His evidence was that he recalled going back over to Brogan McKeough law office and speaking with Mr. McKeough (after June 20^th) and that he had somewhat of a blow up with Mr. McKeough.  He confirmed that Mr. McKeough was supposed to contact them and advise them of what was going on and there had been no contact. He could not recall when this took place.

 

80.            Mr. King referenced Exhibit 1, and specifically the letters under Tabs 1 through 7 from Great American.  He acknowledged receiving various letters.  He indicated that after the fire loss in November 2014 both he and his wife, Linda King, were in somewhat of a bad mental state and they had been simply tossing these letters aside without response.

 

81.            When questioned by the court Mr. King confirmed that Mr. McKeough would repeatedly say to him “don’t worry about it”.  He acknowledged that he was aware the matter was before the court upwards of one year.  He confirms that he recalls starting to deal with Mr. McKeough in and around June 2018 and he specifically recalled asking either Mr. Brogan or the assistant “who is this guy”.  When further questioned by the court he confirmed that he was absolutely certain that he and his wife went to the Brogan McKeough law office two days before the June 20^th trial date to make inquiries as to what was going on and further that he was absolutely certain Mr. McKeough was aware of the pending trial on June 20^th.

 

82.            His recollection was that during a subsequent visit (after June 20^th) he again attended at Brogan McKeough law office and was advised by Mr. McKeough that the matter went away.  Mr. King did recall that Mr. Brogan had called him at some point and questioned him on the claim and again he repeated that he was certain after his visit to the Brogan McKeough law office on or about June 18^th it was his understanding that the matter was still proceeding to court and that he was to wait to hear from Mr. McKeough.  

 

83.            Mr. King confirmed that in his conversations any information he had received from Brogan McKeough was mainly through phone calls from Mr. Brogan.  Mr. King confirmed when he was served notice of the judgment against him, he again took these papers immediately to Brogan Law office and spoke with the secretary, Ms. Wincey.  At that point he recalls Mr. McKeough being aware of his presence and spoke with him, took the papers and confirmed that the matter had gone away. He recalled expressing his concern to the secretary, Karen Wincey, who stated….”TJ said it went away---then it will go away….she said go home and take it easy”. Based on this conversation, he testified that he again believed it was all taken care of.

 

84.            Mr. King couldn’t be certain when he spoke with Mr. Brogan and whether it was on Sunday, June 17^th or Monday June 18^th as suggested by Mr. Brogan which in turn led he and his wife to believe that they did not have to attend court on June 20th.

 

85.            Under questioning from Mr. Trider, Mr. King confirmed that originally he hired a firm known as Kimball Brogan.  He confirmed that when he realized he was dealing with Mr. McKeough he was frustrated and still maintained contact with Mr. Brogan.  He noted that in the beginning he had only met with Mr. Brogan although at a later point the only meeting he had with Mr. McKeough was leading up to the June 20^th court date when he attended at the office.

 

MR. NASH BROGAN – RE-QUESTIONED

 

86.            At the conclusion of Mr. Brogan’s initial evidence to the court arising from his affidavit it was at that point in time he noted, with his cell phone in hand, that from a series of text messages he could verify most of his conversation by text with Mr. McKeough which occurred on the weekend of June 17^th.  He was requested by the Court over the lunch break if he could make arrangements to make hard copies of those text messages which were later tendered as Exhibit 5. He again took the stand for the purposes of introducing this exhibit.  During this re-questioning Mr. Brogan originally testified and again confirmed that he reasonably thought that he was made aware that the matter had been abandoned from a conversation with Mr. McKeough on Sunday evening and immediately thereafter spoke to the Kings. He qualified this by saying that he couldn’t be exactly certain and that this conversation may have been received by him and his subsequent conversation with their clients may have occurred on Sunday evening or Monday evening.

 

EVIDENCE - MR. TJ MCKEOUGH

 

87.            The court acknowledges Mr. McKeough had been subpoenaed by the Respondent/Claimant to provide evidence.  By way of background, Mr. McKeough confirmed he attended law school in England and immediately thereafter returned to Canada and completed the necessary qualifying provisions to allow him to commence the practice of law in Canada.  In December 2012 through April 2013 he worked as a Law Clerk with Mr. Brogan. He commenced his articling in June 2013 and upon completion had been admitted to the Nova Scotia Bar and began practicing in association with Mr. Brogan.  He confirmed at the time Mr. Brogan was operating under the law firm name Kimball Brogan until sometime in 2016. He stated that he continued working in association with Nash Brogan Law Inc. and at some point they began operating under the firm name Brogan McKeough. 

 

88.            From the evidence Mr. McKeough’s name was included on the law firm banner however he confirmed that Mr. Brogan remained the principal owner/partner. 

 

89.            Mr. McKeough indicated that Mr. Brogan was rarely in the office, possibly once per week and acknowledged that he regularly worked from his home.  He confirmed that he was the only other lawyer working in the office together with Karen Wincey who was their legal assistant.

 

90.            He described the manner in which this law office operated insofar as receiving, filing and maintaining documents.  He indicated the physical files would be kept in a series of filing cabinets to a certain extent.  Personal injury files were kept in a specific drawer in the office.  He confirmed that Ms. Wincey would oversee all of the filing and essentially knew where everything was. He confirmed that certain file information was kept in a digital format and he was not able to say whether hard copies of the same were retained in the office.  He confirmed that the normal routine in receiving information into the office would include stamp-dating information and ensuring it was filed either by way of hard copy or digital.  Mr. McKeough confirmed that it would not be uncommon for him to sign letters on Mr. Brogan’s behalf.  

 

91.            Mr. McKeough said he became involved together with Mr. Brogan on behalf of the Kings (Applicant/Defendants) in connection with the Intact Insurance file matter.  He confirmed that he did not have any personal contact with the Kings about that file matter other than possibly notarizing some documents for Mr. King. 

 

92.            Mr. McKeough confirmed that relative to the matter before the court, he had met with Mr. King about the Quick Judgment that had been granted by the court in September 2018 and advised them that Mr. Brogan would take care of this. 

 

93.            Mr. McKeough confirmed that he personally was never retained by Mr. King to represent him in any capacity.  He further indicated that he never communicated with Mr. King.  He noted “Mr. Brogan instructed me to only do what he (Brogan) told me to do”. 

 

94.            Mr. McKeough recalled Mr. King bringing in the Quick Judgment Application at the office and Mr. McKeough recalls seeing Mr. King only.  Mr. McKeough confirmed the general email address for the office was also on his personal phone.  He understood the practice was that Mr. Brogan would check emails at the office regularly.  He confirmed that he created his personal email address in 2013 for the purposes of using it for work email.  He did not recall receiving the initial Notice of Claim when it first came in.

 

95.            Mr. McKeough referenced an email from Brogan Law to Mr. Trider dated November 1, 2017 (earlier referred to) providing confirmation that “a Defence would be filed this week”.  He confirms he most likely had sent that on behalf of Mr. Brogan.  He further confirmed he recalled after their receipt of the amended Notice of Action (early March 2018) he had prepared a rough draft of a Defence and gave it to Mr. Brogan. 

 

96.            He further stated with reference to the November 2017 email (Exhibit 1, Tab 19) where he advised Mr. Trider that they had been re-retained, that Mr. Brogan would have advised him what to say.  He further confirmed that he provided his personal email to Mr. Trider requesting that he use this so as to ensure he would not miss anything on the file. He further stated that their general office emails could be viewed by Mr. Brogan, Ms. Wincey and himself.

 

97.            With reference to Exhibit 1, Tab 21, and specifically the email from Mr. Trider to Mr. McKeough advising that if he doesn’t receive a Defence he will be filing a Quick Judgment, he recalled receiving it and indicated Mr. Brogan advised him multiple times to respond saying “we will file a Defence”. 

 

98.            With reference to Exhibit 1, Tab 22, a letter dated January 26, 2018 from Mr. Trider addressed and couriered to Mr. Brogan containing a copy of the Respondent/Claimant’s Application for Quick Judgment, he couldn’t recall specifically seeing this but recalled Mr. Brogan directing him to attend court on February 28^th and seek an adjournment. He confirmed that he did attend at which time he learned the matter had been adjourned for purpose of the Respondent/Claimant filing an Amended Claim.  He noted he could not have filed a Defence as only Mr. Brogan had cheque signing authority in connection with office expenses.  Mr. McKeough was referenced to Exhibit 1, Tab 23 which contained a letter dated March 1, 2018 from Mr. Trider directed and couriered to Mr. McKeough at Brogan McKeough Law which included an Amended Notice of Claim.  Mr. McKeough did not recall receiving this letter.  He noted that Ms. Wincey would put this type of communication/documents on the counter so Mr. Brogan could review it and tell Ms. Wincey what to do.  He did acknowledge that sometime in the spring he became aware of the Amended Claim and he recalled that Mr. Brogan directed that a Defence and Counterclaim be prepared and filed to the Amended Claim. Mr. McKeough recalled that Mr. Brogan had reviewed broadly what was to be set forth as a Defence and Mr. McKeough was to draft it.  He couldn’t specifically recall when this conversation may have occurred but only the fact that there was no snow on the ground at the time.  He noted that he prepared a rough draft of a Defence and his handwritten notes were left on the counter like everything else. His evidence was he could not recall preparing any counterclaim.

 

99.            With reference to the scheduled June 20^th court date, he testified that he called Mr. Trider on the Monday (June 18^th) for the purposes of obtaining documents from him because he couldn’t find any file materials in the office.  He noted that their office had a file system called Kozy which assisted them in maintaining court dates, limitation dates, etc.  He stated that is how he learned of the June 20^th trial date and acknowledged Mr. Brogan had asked him about the case several times but nothing recent. 

 

100.       Mr. McKeough confirmed it was his telephone number that was shown on the series of text messages exhibited to the court by Mr. Brogan.  With reference to Mr. Brogan’s evidence surrounding the exchange he and Mr. McKeough had on the weekend of June 17^th by text, he recalled he did have a conversation with Mr. Brogan but denied that Mr. Brogan’s evidence reflected its accuracy.  Mr. McKeough confirmed that he had prepared a Defence however had not been involved with any counterclaim.

 

101.       Mr. McKeough confirmed Mr. King had contacted their office either by telephone or in person on June 18^th about the scheduled hearing for June 20^th. 

 

102.       Mr. McKeough confirmed that he had found out about the hearing scheduled for Wednesday, June 20^th on Monday June 18^th and noted that their assistant, Karen Wincey, appeared to have known of the trial date.  He confirmed that it was during his conversation with Mr. Trider on Monday June 18^th he first became aware of the Quick Judgment Application advanced by the Respondent/Claimant.  He noted he recalled Mr. Trider indicating that they would not be entitled to notice as no Defence had been filed. He testified that following this call Mr. Trider sent to him electronically the information regarding the Quick Judgment Application.  Mr. McKeough commented that he never told Mr. Brogan the Respondent/Claimant had abandoned their claim.  His recollection was that he told Mr. Brogan “he was waiting for the court’s decision” presumably arising from the Quick Judgment Application heard on June 20^th. 

 

103.       With reference to Exhibit 1, Tab 26 and specifically the letter from Mr. McKeough to Mr. Trider following the court’s July 30^th decision, he said Mr. Brogan, upon reviewing Mr. Trider’s earlier letter to the court (Exhibit 1, Tab 25) directed him to write a strong letter threatening to go to the Bar Society.

 

104.       Mr. McKeough acknowledged that he was aware that the court’s decision directed that a Defence be filed and his position was that it was Mr. Brogan’s responsibility to file a Defence.

 

105.       Mr. McKeough confirmed that he was aware of the rescheduled dates of September 12^th and later November 28^th, 2018 as they were placed in their “Kozy system”. 

 

106.       In response to questioning from Mr. Trider about the fact that their ongoing communication/email exchange was principally between TJ McKeough (personal email) and himself, he confirmed that he would simply print the emails and leave them on Karen’s desk to be given to Mr. Brogan and filed.  He further confirmed on cross-examination that he did not recall any discussions about a Defence to be filed.

 

107.       With reference to the response set forth in Exhibit 1, Tab 30, which is a letter of notice from Mr. Trider, addressed to TJ McKeough and couriered to his office advising of a further Application for Quick Judgment (third), Mr. McKeough stated at the time there was temporary staff in their office and indicated that he never saw it.  Mr. McKeough also confirmed upon cross-examination that he also never saw the specific memo from the court (Exhibit 6).  He stated that he did not know a Defence had not been filed.

 

108.       With reference to Exhibit 1, Tab 31, Mr. McKeough’s email to Mr. Trider dated November 27, 2018 (previously reproduced at para. 31), he confirmed Mr. Brogan wanted this particular claim purposely delayed until the Intact case was settled.  Specifically, he wanted to delay the Respondent/Claimant’s investigation of their insurance matter and any formal statements required to be given by the Applicant/Defendants.

 

109.       On cross-examination, Mr. McKeough further stated in connection with their efforts to settle the Intact Insurance claim, Intact’s legal counsel repeated to Mr. McKeough that Mr. Brogan told him…”my client is guilty but you will never prove it”.  At this point the court intervened and reminded Mr. McKeough that in spite of the fact that he was subpoenaed into these proceedings he was still required to maintain his obligation to protect any solicitor-client privileged information that either he, Mr. Brogan or anyone else in his office held as it relates to this or any other proceeding.

 

110.       Mr. McKeough stated that he essentially forged Mr. Brogan’s name from time to time so that certain payments from the office could be made.  His remuneration arrangements with Mr. Brogan were 27% on personal injury files and 10% on criminal files.  He confirmed that although the banner Brogan McKeough was a registered name he confirmed that he was not a partner.  He also noted on cross-examination that the Kings would be mistaken saying that they saw him on the 18^th.  He noted that the reason he asked Mr. Trider to send the emails directly to his (TJ’s) personal email address was because he became aware that there had been previously missed emails not re-directed to him.  When questioned about his email to Mr. Trider saying that he would file a Defence.  Mr. McKeough’s response was that he “never gave any undertaking”.  Mr. McKeough couldn’t explain why his handwritten Defence was not in the file and he again re-confirmed that he was instructed by Mr. Brogan what to email to the Respondent/Claimant’s counsel and simply sent it.

 

111.       He confirmed regarding the adjournment issues that he did speak with Mr. Brogan and received and carried out the instructions he was provided from him. With reference to Exhibit 1, Tab 21, (further email from Mr. McKeough to Mr. Trider on Oct 16^th, 2017 advising a Defence will be filed) he stated it reflected instructions from Mr. Brogan as to what was said. He confirmed he was in constant contact with Mr. Brogan as well as the office assistant. 

 

112.       With reference to the first Application for Quick Judgment scheduled for late February 2018, the intent was to seek an adjournment and he stated it was not until he showed up on the hearing date that he became aware that the matter had been taken off the docket and the Respondent/Claimant directed to prepare an Amended Claim.  Mr. McKeough specifically advised that by the end of 2017 Mr. Brogan would be signing everything.  He noted that prior to 2017 he could start actions, file Defences and use the office debit card to get reimbursed but Mr. Brogan did not like this.

 

113.       When questioned about receiving and reviewing communications sent to him under his personal name, he confirmed to the court “just because my name is on it does not mean I got it” noting that various files Mr. Brogan controlled himself. Mr. McKeough was questioned about the notice the court arranged to personally serve upon him in August through the Sherriff’s office and stated he acknowledges receiving it but did not open it. He stated he took it to his office and left it unopened and put it in “Nash’s pile”. He was questioned about the Defence/Counterclaim he prepared in April/May 2018 and was asked why it had not been filed and his response was “not my task to file a Defence”.  He further noted that as it relates to the handwritten notes about the Defence and Counterclaim, they may have gotten left on the counter in Mr. Brogan’s “to do” file. He further confirmed that through the use of their Kozy system, it was effectively a calendar for recording dates that everyone could access and allow everyone to track each other.  When asked about this system and the fact that he would have known about the June 20^th court date, his response was that their practice was not as pro-active and he would simply look at the calendar the night before.  He acknowledged that he had become aware of the June 20^th trial date by Ms. Wincey on the prior Monday. He stated he was not aware of the purpose of the Kings’ call or visit to their office and for certain he did not tell them to not show up in court on the 20^th.  Mr. McKeough confirmed he had been directed by Mr. Brogan to attend court on June 20^th and request an adjournment.  

 

114.       He noted that on or about September 12, 2018 his cell phone had broken and was replaced. Therefore he stated he was not in a position to recall and verify the text exchange Mr. Brogan had tendered to the court. His recollection was that he recalled speaking with Mr. Brogan on the evening of Monday, June 18^th.  He indicated that he looked in the office on that Monday to find a copy of the documents and could not find any.  With reference to Exhibit 5, a copy of the text exchanges between he and Mr. Brogan, he confirmed that he doesn’t accept the dates but that it would have reflected the general gist of the exchange with Mr. Brogan about looking for the hard copy of the Defence and Counterclaim and he confirmed he had no knowledge of any Counterclaim.  He couldn’t recall when the Kings called their office.  He repeated again that he found out that Monday (June 18^th) about the June 20^th trial date from their assistant.  He again confirmed that he did not know what the purpose of the Kings’ contact with their office was on that Monday June 18^th.  He confirmed that when he spoke with Mr. Trider on Monday June 18^th, it was Mr. Trider who told him about the Quick Judgment scheduled for Wednesday (June 20^th). He confirmed that after speaking with Mr. Trider he confirmed he did not have any discussions with the Kings but that he spoke with Mr. Brogan.  He confirmed that it was not him who told the Kings not to show up on June 20^th.  With reference to Exhibit 1, Tab 19, Mr. McKeough indicated that he was aware of the status of the Intact Insurance claim at that point in time and the only thing remaining was to settle on the quantum.    

 

115.       Mr. McKeough indicated that between attending in court in June through to September he no longer cared about Mr. Brogan’s file matters.  He did not recall at any time speaking with the Kings about when they got served the judgment.  He indicated that he found out about the Judgment from Karen Wincey.  He stated Mr. Brogan was looking into the judgment matter. When Mr. McKeough was asked, he stated he did not feel he was an ineffective counsel.  Mr. McKeough repeated saying that Mr. Brogan’s instructions were to appear on June 20^th and object.

 

116.       With reference to Exhibit 6 (letter from the court), McKeough said he had never seen it and indicated that he simply gave documents of this nature to Ms. Wincey.

 

LEGISLATION

117.       In dealing with the application before the court the relevant statutory provisions of the Small Claims Court Act (NS) are sub-sections 23(1) and (2) which set forth the parameters under which a Quick Judgment may be granted and set aside:

 

23(1) Where a defendant has not filled a defence to a claim within the      time required by the regulations and the adjudicator is satisfied that

a)                  each defendant was served with the claim and the form of defence and with notice of the time and place of adjudication; and

 

b)                  based on the adjudicator’s assessment of the documentary evidence accompanying the claim, the merits of the claim would result in judgement for the claimant, the adjudicator may, without a hearing, make an order against the defendant.

 

(2)  Where a defendant against whom an order has been made pursuant to subsection (1) appears, upon notice to the claimant, before the adjudicator who made the order and the adjudicator is satisfied that:

a)               the defendant has a reasonable excuse for failing to file a defence within the time required; and

b)               the defendant appeared before the adjudicator without unreasonable delay after learning of the order, the adjudicator may set aside the order and set the claim down for hearing.

 

118.       In addition to the statutory directions set forth in sections 2 (a) and (b) above, upon review of the evolving jurisprudence both through decisions of fellow adjudicators of the Nova Scotia Small Claims Court as well as our Supreme Court (Trial division), there remains what appears to be an unsettled issue of whether an adjudicator, in considering an Application to set aside a Quick Judgment, must also address whether the Applicant/Defendants have satisfied the court that there is an arguable issue to be tried as well as any issues of prejudice to either party. Counsel for both parties on this application addressed these issues and therefore the court will respond with its view accordingly.

 

ISSUE

 

119.       Having regard to the evidence and legal arguments advanced in connection with this application the principal issue may be characterized as follows:

Did the failure on the part of the Defendants’ legal counsel to file a Defence afford the Defendant with a “reasonable excuse”, so as to warrant this court exercising its discretion to overturn the Quick Judgment it had issued and order a new hearing.

 

120.       Neither party argued to the court that the provisions of Section 23(2)(b) had not been satisfied insofar as the Applicant/Defendants advancing this application to the court without unreasonable delay. The court is satisfied based on the evidence that this statutory requirement has been satisfied. 

 

LEGAL ANALYSIS AND DECISION

 

121.       As the court indicated at the outset, the evidence surrounding the conduct of legal counsel for the Applicant/Defendants in connection with the original and Amended Claim is quite concerning. The court wishes to make it abundantly clear at the outset that its principal analysis of the evidence and determination as to whether the Applicant/Defendant has a reasonable excuse has been viewed through the eyes of the Applicant/Defendant(s) as at the time in which the Quick Judgment was issued in September 2018.

 

122.       However, the court has provided in this decision an exhaustive review of the evidence tendered to it in connection with this application principally because of competing versions of events given under oath by two members of the Bar. This has challenged the need for this court to address issues of credibility as between Mr. Nash Brogan and Mr. TJ McKeough. What is clear from all the evidence is that either solicitor Brogan or McKeough, or both failed to file a Defence on behalf of the Applicant/Defendants which led to the issuance of the Quick Judgment.  What is less than clear is the reasoning for not taking the required action. More directly, based on the evidence of Mr. McKeough, he suggests such failure to act was planned and deliberate by Mr. Brogan as part of counsel’s strategy and case management of the Applicant/Defendants’ file. Mr. Brogan has denied this. Based on the evidence someone is not telling the truth and the court finds it necessary to determine, as best it can from the evidence, where the truth lies in order to fairly assess the issues surrounding whether there is a reasonable excuse for a Defence not having been filed. This is not to the exclusion of the other factors the court is required to address associated with common law principles, but certainly the one in which the Applicant/Defendants principally rely upon in advancing this application.

 

123.       Mr. Brogan testified that he fired Mr. McKeough as an associate of his law practice on November 11, 2018. The evidence of Mr. Brogan confirmed that he first learned of the Quick Judgment having been issued in and around mid–November 2018 and initially filed an appeal to the Supreme Court and shortly thereafter, on December 4^th, 2018 filed the Application now before the court. One of the exhibits (Exhibit 1, Tab 31) advanced by the Respondent/Claimant and confirmed under oath by Mr. McKeough is the email which I have reproduced under paragraph 31. At the time in which this was sent, November 27, 2018, based on the email address it was sent under, it appears Mr. McKeough was then practicing with another law firm. On its face the contents could be considered a breach of his solicitor-client relationship to the Applicant/Defendants however that is not an issue I need determine. The email was not objected to, re-confirmed through Mr. McKeough’s evidence, and therefore remains before this court to assess. In addition to Mr. McKeough’s evidence referenced in paragraph 108, Mr. McKeough advanced in his evidence, referenced in paragraph 109 of this decision, a statement as to what he had become privy to while representing the Applicant/Defendants in connection with their related insurance claim against Intact. His evidence confirmed that his then colleague, Mr. Brogan, was reported as saying to counsel for Intact something to the effect that “his clients were guilty but they would never prove it”. Again while this too may be considered a breach of solicitor-client privilege owed to the Applicant/Defendants, no objection was advanced. In the face of this evidence given under oath by an officer of the court, as bizarre as it may be, if found to be true, it would present a factual basis to determine that the actions of the Applicant/Defendants’ counsel in failing to file a Defence may have been purposely deployed on behalf of the Applicant/Defendants to prevent any prejudice to them as it related to their collateral insurance claim against Intact. More directly, if Applicant/Defendants’ counsel purposely sought to delay matters by not filing a Defence within the required time as a means of a strategy in representing their clients, as Mr. McKeough’s email to Mr. Trider suggests, then that would not, in this court’s opinion, represent a reasonable excuse to overturn the Quick Judgment. I find that the Applicant/Defendant(s) were personally aware of the Small Claims Court action, the need to file a Defence and were presumably involved directly with the Intact Insurance claim which was ongoing into the spring of 2018 at which time the evidence confirmed it was settled.

 

124.       Counsel for the Respondent/Claimant requested the court, particularly in light of the above-noted representations advanced by Mr. McKeough, to take a broad view of this matter before the court including the various exhibits showing the exchange of communication between counsel, between the court and counsel, direct service of documents on the Applicant/Defendants at different times, and the efforts by the Respondent/Claimant Insurance company in 2015-16 to have the Applicant/Defendants co-operate in allowing them to complete their investigation. Again having regard to the evidence advanced by Mr. McKeough and the seriousness of the issues of credibility before the court, this court finds it both reasonable and necessary to take a broad view of the evidence and conduct of the parties, including legal counsel surrounding the original and Amended Claim as well as the three applications for Quick Judgment that had been advanced by the Respondent/Claimant.

 

125.       The evidence given by Mr. McKeough as it relates to his involvement with the Applicant/Defendants in connection with both the claim subject to this Application as well as the Intact Claim was that they were Mr. Brogan’s clients and he took his instructions directly from Mr. Brogan as it related to anything he did or did not do in connection with representations their firm provided to the Applicant/Defendants. His position was that it was Mr. Brogan’s responsibility to file a Defence on their behalf and he did not. His evidence was that on or about  June 17^th or 18^th, 2018 he denied telling Mr. Brogan that a Defence and Counterclaim had been filed, that he denied telling Mr. Brogan that the Claim had been withdrawn by the Respondent/Claimant and the matter was over. He denied that he advised the Applicant/Defendants to not appear in court on June 20^th or that he had any conversation with the Applicant/Defendants leading up to the June 20^th hearing date. He denied withholding the court’s July 30^th, 2018 decision arising from the second application for Quick Judgment from Mr. Brogan or their clients and maintained that Mr. Brogan was aware of the decision. He also confirmed that Mr. Brogan was aware of Mr. Trider’s subsequent letter to the court (August 2018, Exhibit 1, Tab 25) and specifically directed him to reply to Mr. Trider threatening to report him to the Bar Society (Exhibit 1, Tab 26).  Mr. McKeough’s evidence was that following the court’s July 2018 decision (Exhibit 1, Tab 24) he had very little, if anything, to do with this file matter. He confirmed that all subsequent correspondence, emails, registered letters, information received by courier directed to him were not reviewed by him and simply re-directed to Mr. Brogan at their office. He denied being aware of the Respondent/Claimant’s third application for Quick Judgment advanced in September 2018 in spite of the fact that notice of the same was specifically directed to him and sent by courier and received by his office on or about September 19-20, 2018.

 

126.       In contrast, Mr. Brogan’s evidence, if believed, sets up a situation whereby Mr. McKeough had blatantly lied to Mr. Brogan and in turn the Applicant/Defendants and indeed this court. The issue then turns to whether the Applicant/Defendants are innocent victims of what appears to be the negligent actions or non-actions of their legal counsel and submit that this should afford them a sufficient reasonable excuse as to why a Defence had not been filed with the court and the judgment should be overturned.

 

127.       Mr. Brogan confirmed in his affidavit that he was counsel to the Applicant/Defendants. He confirmed that Mr. McKeough had been hired as his associate and he would be involved in many of Mr. Brogan’s file matters assisting with trial preparation, preparing and filing pleadings, responding to communications with clients and opposing counsel. He confirmed that he had been initially engaged by the Applicant/Defendants arising from a fire claim (2014) against the Applicant/Defendants then insurer, Intact Insurance. He confirmed that Mr. McKeough was assisting him with matters initially pertaining to the Intact claim and later the matter now before the court. He acknowledged that he would regularly work from his home and during the winter months, in recent years, he spent time in Florida but maintained regular contact with his office regarding his file matters.

 

128.       Mr. Brogan acknowledged his initial exchange with Mr. Trider in 2017 and was aware that a formal demand and later claim had been filed against the Applicant/Defendants. He confirmed that he was aware a Defence was required to be prepared and filed along with a counterclaim for monies his client had continued to pay on the lease well after the original fire loss. The evidence is less clear as to what Mr. Brogan knew about the status of this matter before the court as time entered into early 2018. He confirmed to the court that at no time was he ever aware of any applications for Quick Judgments, including the initial one advanced in January 2018, the one addressed by the court on June 20^th giving rise to a written decision and the final or third one advanced in September 2018. He confirmed that he had been aware that Mr. McKeough had attended court in February 2018 to secure an adjournment and that the matter had been put off by the court directing that an amended claim be filed by the Respondent/Claimant and re-served. He recalled to the court that he became aware of the Amended Claim and specifically the new trial date set for June 20, 2018. He noted it was placed in their office calendar as was their normal practice. He testified that he had directed Mr. McKeough to prepare and file a Defence and Counterclaim in response to this Amended Claim and believed that had been completed.

 

129.       Mr. Brogan confirmed that sometime in March 2018 they concluded a settlement of the Intact claim on behalf of the Applicant/Defendants. He further confirmed as part of the negotiations, the loss value associated with the leased equipment had been withdrawn from the Intact claim. It was Mr. Brogan’s evidence that the Applicant/Defendants did cooperate with the Respondent/Claimant’s Insurance Company, Great American, by completing and sending to them the information requested (see Exhibit 1, Tab 12). There was no hard evidence of this specific information presented to the court other than Mr. Brogan’s July 18, 2017 letter to Mr. Trider which purportedly contained copies of materials the Applicant/Defendants had sent to Great American.  Mr. Brogan had no explanation for Mr. Trider’s response (Exhibit 1, Tab 13) noting the “requested consents” to be signed by the Applicant/Defendants, although referenced, had not been attached.  

 

130.       It was Mr. Brogan’s evidence that he has been practicing law for 40 years largely in the areas of criminal and civil litigation. He considered himself an experienced trial lawyer and with that stated that the working relationship he had with Mr. McKeough was that Mr. McKeough would deal with all of the routine mechanics associated with trial readiness, pleadings, response to pleadings, correspondence and so forth and Mr. Brogan would represent the matter in court. He testified that on Friday, June 15^th, 2018 he entered into a series of text message exchanges with Mr. McKeough that spanned into Sunday, June 17^th. These were tendered to the court (Exhibit #5). They principally dealt with Mr. Brogan’s efforts to obtain the complete file from Mr. McKeough and in particular a copy of the Defence and Counterclaim that he believed had been filed. Mr. Brogan stated that his intention was to meet with the clients to prepare for the upcoming hearing.

 

131.       The court finds, based on the evidence, that it was around June 17-18^th, 2018 that the real mystery so to speak surrounding this Application appears to have arisen amongst Mr. McKeough and Mr. Brogan as well as the Applicant/Defendants, Mr. and Mrs. King, as to who said and did what and when. Mr. Brogan’s evidence was that at some point either on Sunday or Monday evening (June 17^th  or 18^th, 2018) he received a call from Mr. McKeough after his text exchange with him on Sunday, June 17^th advising that the claim had been withdrawn. Mr. Brogan later questioned his recollection as to when he had received that call indicating it may have been on the following evening (Monday, June 18^th). His evidence was certain that he had received a call from and had been advised by Mr. McKeough that the matter had been withdrawn. He testified that he had spoken with the clients (Applicant/Defendants) advising them of this and seeking confirmation of their willingness to abandon their counterclaim which he believed had been filed. He testified they agreed to this as they wanted the matter at end. Mr. Brogan testified that he was not at any time made aware that an application for Quick Judgment had been scheduled to be heard on June 20^th or that Mr. McKeough had attended court on that date to make any representations.

 

132.       Mr. Brogan testified that he had no further involvement with the file matter, received no communication in connection with the file matter and assumed Mr. McKeough had completed the file wrap up. Mr. Brogan denied being aware of Mr. Trider’s letter to the court in August or instructing Mr. McKeough to send any response. He stated he was not aware of the court’s July 30^th decision, any re-scheduled court dates or communications from the court and finally the third application for Quick Judgment filed in September 2018. He confirmed that he became aware of the judgment that had been issued against his clients in mid-November when his clients had attended at his office and provided a copy together with an execution order. He testified that he immediately contacted Mr. Trider and commenced proceedings which have led to this application now before the court.

 

133.       In determining the credibility of the competing evidence between Mr. Brogan and Mr. McKeough, having regard to all of the evidence, as a finding of fact I find Mr. Brogan’s evidence to be more logical and credible. Mr. Brogan, as he has represented, is an experienced trial lawyer and would be very much aware of the required court deadlines for filing pleadings, Defences and the potential consequences. Frankly, the court remains bewildered as to why no Defence has ever been filed as the process of the Small Claims Court and minimum requirements for satisfying this requirement are very low. It was an easy fix at any point in time and logic suggests that the only rational explanation for any experienced trial lawyer to have not complied with this requirement could only have been acknowledged inadvertence or in this case because they held the belief that it had been filed. While the court recognizes that there may be many reasons and corresponding strategies employed by legal counsel to prolong proceedings before the court, having regard to Mr. Brogan’s trial experience as well as his evidence, not filing a Defence within the prescribed time period and in the face of not one but three applications for Quick Judgment would certainly not be one.  While it may well have been Mr. Brogan’s intention at the early stages, on behalf of his clients, to initially attempt to prolong this matter by delaying and refusing service and requesting extensions so as to allow him to complete the Intact Insurance claim, this is not unusual practice to the extent that counsel can extract the required consent from opposing counsel to delay a matter without misrepresenting or misleading a party. Further, I accept the possibility that Mr. Brogan, in the management of this matter on behalf of his clients, may not have wanted his clients to subject themselves to a competing investigation while he was attempting to settle the Intact claim. This is speculative by the court, however, as to whether those actions, or lack of actions by the Applicant/Defendants in responding to the Respondent/Claimant’s requests for information would come back to haunt them in responding to the Respondent/Claimant’s claim was a risk someone determined to take. However the evidence was clear on all fronts that the Intact claim was settled in and around March 2018. Therefore, I find this would not have been a factor that would have influenced any subsequent decisions relating to responding to the Amended Claim and representations of the Applicant/Defendants relating to the present matter before the court.

 

134.       I find that by Mr. McKeough’s own admission he directed counsel for the Respondent/Claimant to begin corresponding directly to him so he would not miss any communication. The evidence confirms that is what transpired. Therefore, I find that into early 2018 communications, particularly after the Amended Claim was issued, whether by email or letter sent by courier, were each specifically addressed to Mr. McKeough under the firm banner, Brogan and McKeough. I do however note that Mr. Trider’s January 26^th, 2018 letter which contained notice of the first application for Quick Judgment was addressed to Mr. Brogan however I also acknowledge that the evidence suggests Mr. Brogan was in Florida at the time and his files were being managed by his office assistant and Mr. McKeough.

 

135.       The evidence confirms that the Amended Claim was directed to Mr. McKeough confirming the new trial date of June 20^th.  Mr. Brogan confirmed being aware of this and logic would suggest that one or both counsel would have turned their attention to the need to file, as a minimum, a Defence.  At this point the evidence confirms that Mr. Trider on behalf of the Respondent/Claimant was leaving nothing to chance as it pertained to the attention, or lack of, that he had been shown from Brogan McKeough Law Office. On March 1^st he again served all Applicant/Defendants personally. I am satisfied that Mr. Brogan was aware of the Amended Claim and would have instructed Mr. McKeough to prepare and file a Defence. Mr. McKeough as much as acknowledged this and the only uncertainty was when this direction, in the spring of 2018, was received by him. The court was less certain as to what instructions he may have received regarding filing a counterclaim but accepts Mr. Brogan’s evidence that he had instructed Mr. McKeough to prepare and file one and believed this had been completed.  Clearly, when one reviews Exhibit #5 representing their text exchange, clearly implicit in Mr. Brogan’s request to receive a copy of the filed Defence and Counterclaim, confirms in my view, was what he believed at that point in time -- that these documents had been prepared and filed. When one views Mr. McKeough’s response to Mr. Brogan’s request I find it to be purposely evasive and misleading. In Exhibit #5 Mr. McKeough responds to Mr. Brogan’s inquiry as to where the hard copy of the Defence and Counterclaim is, noting it was not in the file that had been delivered to him stating “….it should be in the file, I was looking at it yesterday, hand written form 1…” and goes on to set forth what was in it. This tells the court two things. First, accepting the evidence of Mr. Brogan and the date of the text messages tendered to the court, Mr. McKeough by his own admission handled the Applicant/Defendants’ file on the weekend of June 16^th and therefore presumably knew of the June 20^th court date. Secondly, as he acknowledged to Mr. Brogan in his text that he had reviewed the Defence himself the day prior, clearly he knew or ought to have known that no Defence and Counterclaim had been formally prepared and/or filed with the court. The real mystery of course is why Mr. McKeough chose to allow Mr. Brogan to have operated under this mistaken belief that a Defence and Counterclaim had been filed and equally perplexing is why he simply did not prepare and file a Defence on or before the June 20^th court date, before the hearing on the Quick Judgment. Further, as noted by Mr. Brogan he was unclear as to exactly when he received word from Mr. McKeough that the claim had been withdrawn other than it had to have been either on Sunday, June 17^th or Monday, June 18^th. In Mr. McKeough’s evidence he confirmed his recollection that he spoke with Mr. Brogan on June 18^th. In support of his recollection the evidence of the Applicant/Defendants was that they had attended Mr. Brogan’s office on Monday, June 18^th to inquire as to the status of the June 20^th hearing date as at that point they had not received contact from anyone. Mr. McKeough’s evidence was that he had not met with the clients on June 18^th but had learned of the June 20^th court date from their office assistant on that date.  In conflict to this evidence, on June 20^th Mr. McKeough made representations to the court arguing against the issuance of a Quick Judgment stating that he had only became aware of the June 20^th court date from their clients visiting his office on Monday June 18^th.

 

136.       The mystery continues in that the Applicant/Defendants were not present in court on June 20^th. The Applicant/Defendants’ evidence was that they were told in a call with Mr. Brogan that the matter was over and there was no need to appear in court on June 20^th. I accept their evidence which supports Mr. Brogan’s evidence that following Mr. McKeough’s confirmation to him that the claim was withdrawn (I note Mr. McKeough denies telling him this), Mr. Brogan testified that he advised his clients that the matter was over and they would not have to appear.

 

137.       There are a host of other inconsistencies or illogical evidence given by Mr. McKeough, such as acknowledging being personally served a document by the Sherriff, addressed to him and simply not opening it to review; information being addressed to him personally and sent to his office by courier and again not opening it for review; suggesting that into the summer and fall of 2018 he had nothing to do with the file and effectively washed his hands of Mr. Brogan’s file matters. I find to ask the court to believe this by a practicing member of the Bar is in itself unbelievable.  It is reasonable for this court to determine that Mr. McKeough as a practicing member of the Bar knew or certainly ought to have known that he continued to owe a duty to the Applicant/Defendants until he advised them otherwise, which he did not. To suggest now that they were not his clients yet to represent to both opposing counsel as well as the court that he was their counsel, simply makes no sense.

 

138.       Finally, as to the issue of credibility the court wishes to briefly re-visit its July 30^th decision. As clearly reflected in that decision, the principal reasoning of the court to have not granted the Quick Judgment application submitted to it was largely based on the representations of Mr. McKeough as an officer of the court. He clearly represented to the court that he had not received any notice of the amended court date arising from the filing of the Amended Claim and led the court to believe that opposing counsel, Mr. Trider, had taken the position that “he was not entitled to notice”. The evidence now before the court clearly confirms the fact that Mr. McKeough was personally sent by courier from Mr. Trider’s office on or about March 1^st a copy of the Amended Claim which he also personally served upon the Applicant/Defendants and the tracking receipt of this was clearly acknowledged by his office assistant. Further, Mr. McKeough’s evidence  acknowledged that he had become aware of the new hearing date of June 20^th sometime in the spring (recalls no snow on ground). Having regard to all of the evidence received as to what likely took place in and around June 17^th and 18^th between he and Mr. Brogan, the court is now of the opinion that Mr. McKeough purposely misled the court in his efforts to stave off the issuing of the second Quick Judgment application.

 

139.       Having satisfied myself that Mr. Brogan did not purposely refrain from filing a Defence in an effort to delay proceedings as alleged by Mr. McKeough, the final piece of the puzzle turns to the evidence of the Applicant/Defendants and what role or knowledge they had or ought to have had as it related to the negligent conduct of their legal counsel. The court wishes to confirm that while it has accepted the evidence of Mr. Brogan over that of Mr. McKeough, it is worthy of note that this is not intended to fully expunge Mr. Brogan from his continued professional responsibility and duty he owed towards the Applicant/Defendants in connection with this matter. He was clearly the senior/lead counsel dealing with this file matter and I accept that Mr. McKeough had been practicing law under his direction as it related to Mr. Brogan’s client matters. In spite of the bizarre series of events the evidence has revealed as it relates to the apparent withholding of information, providing misleading information and lack of attention to basic yet fundamental obligations as between two members of the Bar practicing together on the same file matter, I find both failed in their duty to their client on a host of issues. Clearly, the affidavits of Mr. Brogan, Mrs. King and Mr. King all confirm their intention to file a Defence and Counterclaim from the outset. In fact the affidavit evidence from all three stated that they believed a Defence and Counterclaim had been filed in anticipation of the scheduled trial date of June 20^th. However, the evidence of the Applicant/Defendants also confirmed that they showed up at the law office on June 18^th because they were worried and had received no contact from anyone in the face of the June 20^th trial date.

 

140.       The evidence confirms that the Applicant/Defendants were personally served with documents on two occasions. This included the original claim in the fall of 2017 and the amended Notice of Claim issued in late February 2018.  The affidavits of both Mr. and Mrs. King (Exhibits # 4 and 3) confirm their evidence to be that every time they were served a court document they immediately took it to their solicitor, Mr. McKeough, to deal with. It is noted that in their hearing evidence, Mr. King did note as it related to the Amended Claim they assumed that their lawyers would also have been served and therefore knew about the June 20^th hearing date. They stated that they were not aware of any applications for Quick Judgment nor the court’s decision issued in July 2018.

 

141.       In their testimony before the court, particularly Mr. King confirmed that he was uncertain of Mr. McKeough’s role with their file matter as they initially engaged Mr. Brogan to represent them. He further clarified that when they received any documents they would take it in and give it to the secretary, Ms. Wincey, and they assumed she would give it to either Mr. Brogan or Mr. McKeough to deal with. Mr. King testified that he had called the law office and spoken with the assistant, Ms. Wincey, and she advised that Mr. McKeough was dealing with file matters. He stated that on the Monday prior to June 20^th hearing, they were upset and attended at the law office. Mr. King testified that during their visit Mr. McKeough came out of his office inquiring as to what is going on. Mr. King confirmed that he told Mr. McKeough “…I’m dealing with Nash, not TJ”. He stated that he had spoken with Mr. Brogan previously about this concern. He stated that Mr. McKeough told him “…don’t worry about it, I am looking after it”. He testified Mr. McKeough was mumbling something to him and he could not understand him. He testified that when he left the office he still believed that he was to attend the hearing scheduled for two days later, June 20^th. His evidence further stated that he recalled going back to the law office, after June 20^th, and he stated he had a blow up with Mr. McKeough because Mr. McKeough was supposed to contact them and let them know what was happening. Mr. King could not recall when this was. Mr. King testified that he was again served the judgment/order paper in early fall 2018 and he took it in to Mr. McKeough. He stated that Mr. McKeough took the paper and said to him that the matter went away.

 

142.       Mrs. King’s evidence was much the same as Mr. King’s. She recalled after their fire loss she and her husband were under a lot of stress. She acknowledged receiving the various letters from Great American and had been ignoring them until March 2017 when they determined that they needed to speak with Mr. Brogan about these letters. She stated that they were referred to Mr. McKeough who began handing the claim. He was provided with the documents served upon them and believed it was being taken care of.  She recalled receiving a phone call from Mr. Brogan advising that the claim was over. She recalled that sometime later they received a registered letter confirming that they owed $25,000.00. She recalled attending at the law office and being advised by Mr. McKeough that the matter was gone, not to worry about it. She stated that they later received another letter saying a judgment had been placed on their property and they again went to the law office and met with Mr. Brogan who confirmed to them that “obviously it has not gone away” which then led to this application.

 

143.       Mrs. King recalled attending at the law office a few days before the scheduled June 20^th trial date and speaking with Mr. McKeough asking him what is going on and his reply was “…not to worry about it”. She confirmed that at no time did Mr. McKeough indicate that he was not aware of the June 20^th court date.

 

144.       Having regard to the evidence of the Applicant/Defendants it would appear, as is not uncommon in most solicitor–client relationships, that they completely relied upon their legal counsel to be aware of and ensure that any required court deadlines were met. I find that this would be implicated in any engagement involving a litigation matter, including a matter before the Small Claims Court.  I am satisfied that there is no evidence to suggest the Applicant/Defendants were experienced and sophisticated litigants. By their own admission, in the months following the fire loss and the ensuing litigation with Intact, they became overwhelmed with concern over matters and simply buried their head in the sand so to speak and ignored the many notices being copied to them from Great American until finally they came to realize in early 2017 they needed help. I accept their evidence in this regard.

 

145.       I am further satisfied from the evidence that it would have been reasonable for them to assume that Brogan McKeough would have been aware of the matter before the Small Claims Court at each juncture and would deal with anything required or otherwise contact them. I also accept their evidence of attending at Brogan McKeough on or about Monday June 18^th and expressing their concern about the pending trial date of June 20^th and being reassured by Mr. McKeough that everything was in hand and that they need not worry. I accept the evidence of Mrs. King where she recalls being contacted in the days prior to the June 20^th hearing by Mr. Brogan and he advised that the matter was over.

 

146.       I am also satisfied that in connection with the third application for Quick Judgment advanced by the Respondent/Claimant in September 2018, it would have been proper for counsel to have provided notice directly to Mr. McKeough as he maintained throughout that he was acting for the Applicant/Defendants. In fact, having regard to Mr. McKeough’s submissions to the court in connection with the second application for Quick Judgment, as noted earlier, the principal basis was the fact that he, “as legal counsel”, had not been notified of the court date. Therefore, I accept the documented evidence tendered to the court that Mr. McKeough had been served notice of this third application for Quick Judgment and prior to that, several registered letters from the court directly to him in his capacity as counsel for the Applicant/Defendants.

 

147.       Based on the evidence of the Applicant/Defendants and the representations made by counsel, it is their position that a reasonable excuse for not filing a Defence within the time required existed based on the actions or lack of action of their legal counsel in not filing a Defence on their behalf. They advance the position that they acted reasonably as a client, engaged legal counsel for the purposes of defending and filing a counterclaim against the Respondent/Claimant, and were led to believe at all material times that a Defence and Counterclaim had been filed with the court. Their position was that they had been misled by their lawyer and should not be deprived of their right to defend and counterclaim.

 

148.       At the court’s request counsel was asked for submissions on the relevant and current law as it pertains specifically to the effect of negligent conduct by legal counsel in dealing with an Application to set aside a Quick Judgment of the Small Claims Court. More directly, if as a result of negligent conduct by legal counsel a Quick Judgment is issued, does that afford an applicant a reasonable excuse to have it overturned.

 

149.       The court has thoroughly reviewed each counsel’s detailed submissions and case authorities relevant to the issues before the court. The court readily acknowledges and agrees with the Respondent/Claimant comment in their supplementary submissions to the court where they state “…in the present case, the conduct of counsel went beyond mere inadvertence and into the realms of absurdity”.  As well, the court acknowledges at the outset the level of frustration expressed by the Respondent/Claimant who, having advanced this claim, repeatedly requested the Applicant/Defendants’ counsel to file a Defence, not for the purposes of protecting the Applicant/Defendant, but to enforce their right to know what the details of any Defence might be. Finally, having advanced three separate applications to the court for a Quick Judgment, the third one having been successful but now challenged. At the outset the court wishes to point out that the subsequent need to file an Amended Claim and in turn the fact that this then made the first application for Quick Judgment moot was not something triggered by the Applicant/Defendants or their counsel. However, the court also recognizes that there had been some delay during the initial stages (fall 2017) when Defence counsel initially advised that they were acting for the Applicant/Defendants, then advised that they were not and later advised that they had been re-engaged but still had not filed a Defence. 

 

150.       The court has accepted that it was required to take a broader view of the complete history of this file matter as represented by evidence and documents filed with the court in order to properly assess and determine overall issues of credibility of the evidence presented on this Application. However the court’s primary focus remains with the circumstances that existed at the time in which the Quick Judgment subject to this Application had been granted in September 2018. More succinctly, the principal issue is whether the Applicant/Defendants bear any responsibly for a Defence not having been filed or alternatively whether their actions together with the conduct of their legal counsel affords them a reasonable excuse sufficient to meet what I must determine to be a reasonable threshold on the scales of relief entitlement.

 

151.       The court acknowledges that the rules requiring that a Defence be filed within a prescribed time is an important element of the overall process of the court. At the heart of any civil action is the right to initiate a claim against another. It may be said that one of the purposes for “allowing” a Defence to be filed is to afford the Applicant/Defendants an opportunity to set forth their response and essentially openly defend themselves. However, the primary purpose for “requiring” that a Defence be filed would in part be a mechanism to close off the pleadings before the court and allow the matter to move forward without delay but equally important, to afford the Respondent/Claimant a form of notice as to whether the claim is to be contested and if so the basis for such contest. Therefore, at the outset the court acknowledges the importance of rendering a decision on an Application of this nature that is grounded in sound and fair reasoning and does not threaten to “water down” the established rules of the court that must be seen to be important and meaningful to all participants. With that said, it has long been recognized in the administration of justice, which includes the need to formulate many rules and regulations, that nothing can be absolutely certain or carved in stone. For that reason, decision makers are often afforded a level of discretion in carrying out their statutory duties to apply a reasoned judgement against a set of individual facts presented to them through evidence. It is not an exact science and while uniformity remains an important consideration, seldom is any set of facts on all fours with another reported decision. Therefore while case law may offer guidance it does not relieve a court form exercising the required discretionary judgment applicable to an individual case.

 

152.       Justice Van den Eynden’s decision in Jamieson v. LeFrank, 2013 NSSC 420, which dealt with an Appeal from a Small Claims Court decision pertaining to an Application to overturn a judgment, provides an insightful review of the provisions of the Small Claims Court Act and factors that should be considered when addressing an Application similar to the one now before the court. The sole ground for the appeal was that the Small Claims Court failed to follow the requirements of natural justice. As such this triggered the need for the court to review if and how the principles of natural justice should be applied in rendering decisions from the Small Claims Court. She adopted the views of several other jurists referenced in her decision, all of whom accept that although natural justice is not a defined term within the Small Claims Court Act (NS) it is a familiar concept to the common law and ought to be considered in formulating one’s decision. With specific reference to the decision of Justice J. Warner in Kemp v. Prescesky, 2006 NSSC 122 (N.S.S.C.), she reproduced the following comments of Justice Warner as it relates to the play of natural justice in rendering decisions on Applications similar to the one now before the court. Justice Warner also sets forth what appears to be the accepted standard or test applied by our Supreme Court as to the issues that should be considered. The following comments are reproduced in para. 24 (para 19 of J. Warner’s decision):

 

“In my view, it is a breach of the requirements of natural justice not to have a mechanism in Small Claims Court whereby, if a defendant does not file a defence or appear at a hearing by mistake, but can show that he or she has an arguable defence that should be heard on its merits, and he or she has a reasonable excuse for defaulting and is not just stalling, (emphasis added) and there is no prejudice to the claimant’s ability to prove its case, the judgment cannot be set aside.  In light of the increase in the monetary jurisdiction of the court, it is as relevant to natural justice in the Small Claims Court as it is in the Supreme Court.  There is still a requirement that the applicant show sufficient bases for the court to exercise discretion to avoid abuse. 

 

 

153.       Justice Van den Eynden also provided the following note of caution to a decision maker when faced with making a decision to provide relief in a case where a rule may have been broken. She states in the concluding paragraph of her decision:

“35. Although Small Claims Court Hearings are intended to be accessible to the parties and informal, parties need to be reasonably diligent, mindful and respectful of the process. Otherwise the integrity of and respect for the process is undermined.”

 

154.       At this juncture of the court’s decision the intent is to provide reference to those existing authorities from the Supreme Court of Nova Scotia as well as our own Small Claims Court which have been called upon to deal with similar-type issues now before this court and provide some guidance as the basic framework and factors that have been considered. One of the most recent is the decision rendered by adjudicator Andrew Nickerson in Wilson Equipment Limited v. Simpson, 2018 NSSM 16 (NSSCC). The issue before the court was a similar Application to overturn a Quick Judgment. Adjudicator Nickerson provided a detailed review of several decisions issued by both the Small Claims Court and our Supreme Court dealing with similar Applications. He reviewed each, mainly focusing on what factors each of the decision makers highlighted as being instructive in determining Applications of this nature. The following is taken from his decision:

 

-Kemp v. Prescesky, 2006 NSSC 122 (N.S.S.C.) – see quote in paragraph 152 set forth above.

 

-George L. Mitchell Electrical v. Rouvalis, 2010 NSSC 203 (N.S.S.C.) … At paragraph 23 Justice LeBlanc made his position clear that a litigant is not presumptively entitled to a hearing, nor is there any basis in the statute for a test of “respective prejudice” between the parties.  He confirms that the burden resets with the defendant (Applicant) to establish undue delay and a “reasonable excuse for failing to file a defence within the time required”.

 

Justice LeBlanc further suggested that the test is not “any excuse” but rather a “reasonable excuse”. 

 

-Justice Rosinski in Leighton v. Stewiacke Home Hardware Building Center, 2012 NSSC 184 (N.S.S.C.), considered a situation where the defendant had engaged counsel to defend a claim.  Thereafter the defendant did nothing else and essentially completely relied on her counsel to take full responsibility in the matter.  The defendant in the case had been extremely ill and unable to communicate with counsel without extreme difficulty.  Counsel did not take steps to ensure that she was aware of the correct hearing date and to prepare a defence in advance of that date, file it and serve it or to attend at the hearing.  Quick judgment was not sought and in the absence of the defendant or counsel for the defendant evidence was heard and judgment was granted against the defendant.  An application was made to the adjudicator pursuant to section 23 (4) which was denied, and the matter came before the Supreme Court on appeal.  His Lordship allowed the appeal and ordered a new trial on a “natural justice” basis, but also specifically held that section 23 of the Small Claims Court Act was not applicable to the case before him, holding at paragraph [53] of his decision that the Act was silent in a situation where no defence was ever filed and the defendant did not appear. He grounded his decision on the principles of natural justice.  I take note of the following paragraph:

 

[26]  In my opinion, courts should err on the side of ensuring liberal access to justice, yet they must assess, on a case by case basis, when it is just and equitable to use their inherent jurisdiction.

 

-Jamieson v. LeFrank, supra,  [hereinafter Strait Excavating] Justice Van den Eynden considered a situation where the court date in the Small Claims Court had been set at May 27, 2013.  The Defendant did not appear and put forward as his excuse that he had marked his day planner and house calendar for May 28, 2013.  The defendant said when he “got out his paperwork” and saw the date he called the courthouse.  He acknowledged that getting the date mixed up was purely his mistake.  The adjudicator had proceeded to hear evidence on May 27, 2013 and granted judgment to the claimant.  Her Ladyship reviewed the various authorities with respect to natural justice and concluded that in general terms it is about fairness, and one of the essential elements of that concept is that a decision-maker should “hear the other side”.  Having said this, she makes it clear that this is not an absolute right but rather it is conditioned on the behavior of the defendant.

 

Justice Van den Eynden concluded with the statement previously set forth in paragraph 153 above and dismissed the Appeal.

 

-CIBC Life Insurance Co. v. Hupman, 2016 NSSC 120 (N.S.S.C.).  In this decision Justice Hood reviewed the matter whereby the applicant’s registered agent had been served with a claim but neither filed a defence nor appeared on the hearing date and judgment was entered after hearing the Claimant’s evidence.  In that decision, the adjudicator ruled that he had no jurisdiction based on Justice Rosinski’s decision in Leighton, supra.  Justice Hood, cited Justice Warner’s decision in Kemp v. Prescesky, supra, which also dealt with a similar situation where no defence was filed and the defendant did not appear, and found that the principles of natural justice require that there be the ability for reconsideration upon finding that the defendant had a reasonable excuse for default and there was no prejudice to the claimant.  The matter was sent back for rehearing.  In her decision she noted:

 

[24]    There is, therefore, in my view, the ability for adjudicators to fill gaps in the legislation to ensure there is natural justice in the proceedings before the Small Claims Court.  This is a broad and purposive approach to the Small Claims Court Act.

 

Justice Hood further noted in this decision that while she did have some concerns about the reasonableness of the excuse, she concluded there was no prejudice to the claimant in ordering a new hearing in that the same evidence would still be available. 

 

-Consumer Impact Marketing Ltd. v. Rzepus, 2003 NSSM 9 (N.S. Small Cl. Ct.) – Adjudicator Richardson rendered a judgment in a situation where neither the defendant nor anyone on their behalf appeared on the scheduled court date.  A subsequent application to re-consider under the provisions of the Small Claims Court Act was advanced.  Adjudicator Richardson received evidence that while the claim was originally served on the registered agent for the Ontario company who was a practicing lawyer in Nova Scotia, it was then forwarded on to the Defendant’s Ontario solicitor and nothing further was done.  In response to the motion to set aside the Adjudicator’s original order, Adjudicator Richardson determined that his jurisdiction laid within section 23 of the Small Claims Court Act and in particular considered the question of “reasonable excuse”.  He concluded as follows:

 

[32]  In my view, the Defendant’s basic “excuse” boils down to a statement that it “forgot” about the matter.  However, to “forget” a claim is not a “reasonable excuse:”

 

[33]  The purpose of the Small Claims Court is to adjudicate claims “informally and inexpensively but in accordance with established principles of law and natural justice:” (s. 2 Small Claims Court Act).   In my view that purpose is not served by permitting a defendant to act (or, in this case, fail to act) without any regard for the consequences of failing to make any effort to ensure that a claim is properly handled; and, in particular, that a defence is in fact filed and mounted.

 

[34]  The Claimant in this case attended with a lawyer.  She took the time and incurred the expense (expense which is not recoverable in the Small Claims Court) of marshalling her evidence and presenting her claim.  The Defendant did nothing other than pass the matter along.  In my view, if I were to hold that such lack of action was a “reasonable excuse” it would encourage lax practices on the part of defendants; which in turn would add delay and expense to a claimant who had followed all of the rules expected of him or her.

 

-Mullick v. International Exteriors (Alta) Ltd., 2010 NSSM 9 (N.S. Small Cl. Ct.).  The evidence in this case was that the claim was duly served and the time for filing a defence had expired. It further confirmed that both parties were represented by counsel and for a period of time, approximately two weeks subsequent to the expiry of the time for filing a defence, counsel for both parties engaged in what we commonly refer to as “telephone tag” leaving messages back and forth.  Nevertheless, one of the messages was a request by defence counsel for an extension of time to file a defence.  Claimant’s counsel proceeded and obtained quick judgment.  Adjudicator Parker pointed out that there had been some debate amongst adjudicators as to whether the only jurisdiction of the adjudicator in dealing with such applications is the twofold test specifically set out in the statute, that being lack of reasonable delay and reasonable excuse, or whether in addition the defendant must show that they have a reasonably arguable or plausible defence.  Adjudicator Parker favored the latter approach on the basis that the parties were indeed trying to contact each other and the Claimant’s counsel was aware that Defendant’s counsel had been instructed to file a defence.  A “reasonable excuse” was found to exist.  There was no question of unreasonable delay and the quick judgment was set aside.

 

-D’Arcy v. McCarthy Roofing Ltd. , 2015 NSSM 6 (N.S. Small Cl. Ct.) – In this decision Adjudicator O’Hare was confronted with a similar application to overturn a quick judgment.  The factors of the applicant were essentially that the President of the defendant instructed one of the employees to send it to their lawyer.  Otherwise the evidence was that the President of the company was extremely busy at the time including several out-of-province trips for both business and pleasure, all of which contributed to no defence having been filed. In that decision, citing Justice Rosinski’s decision in Leighton, supra,  the adjudicator held that he had no jurisdiction to set aside but also stated that, if he had concluded otherwise, the defendant, based on the evidence, had not met the test with respect to “reasonable excuse” as set out in the statute.

 

-Hosseini v. Armour Transport Inc., 2017 NSSM 2 (N.S. Small Cl. Ct.) – In this decision Adjudicator Richardson issued judgment following a hearing in which the defendant had not appeared. He then entertained a motion to set aside his judgment.  He too expressed some concern about the state of the law and guidance provided by the Supreme Court jurisprudence particularly in the decision of Leighton, supra, however, went on to consider the merits of the application before him.  With respect to the issue of “reasonable excuse” he says:

 

[62]  The requirement is for a “reasonable excuse” not “any excuse”:  George L. Mitchell Electrical v. Rouvalis, 2010 NSSC 203.  Forgetting is not a reasonable excuse:  Consumer Impact Marketing Ltd. v. Rzepus, 2003 NSSM 9 at para. 32.  Nor is moving a claim from one desk to another without anyone taking ownership of the need actually to respond to the claim:  Consumer Impact Marketing, supra at para. 32;

 

155.       From the court’s review of the foregoing decisions, in addition to a specific issue or comments that I have highlighted, there appears to be a common thread line that bears acknowledging. As it relates to the nature and intent of proceedings before the Small Claims Court it appears that the courts have taken a consistent approach in taking a broad and lenient view as to what a reasonable excuse may be. My sense is that our courts maintain the position that the principles of natural justice be given full effect and the parties be afforded a chance to be heard. That is not to suggest that the rules are meaningless, quite to the contrary. However, having regard to the nature and intent of the Small Claims Court, barring situations where a party is found to have completely ignored the rules or acted without any regard, the courts have more consistently erred on the side of liberal access to justice. With that said the courts also recognize that every case is to be judged on its own facts.

 

156.       From my review of the relevant cases there appears to be some unsettled issues surrounding what, if any factors ought to be considered beyond those specific statutory factors set forth in Sections 23 (2)(a) and (b). Without wandering into the debate on this issue I am satisfied that it is reasonable in assessing an Application to overturn a Quick Judgment under the provisions of the Small Claims Court Act that consideration of well-established common law principles should also be employed and that the Applicant/Defendants should establish that there is an arguable Defence on the merits and that there is no prejudice to the Claimant’s ability to prove its case. I further find that the threshold in weighing these factors is low. As previously noted, both counsel for the parties now before the court in their post-hearing submissions have raised and advanced comment on these two collateral issues relative to the evidence received.

 

157.       Before determining whether there is need to address these additional factors, clearly the most significant is the determination of whether there is a reasonable excuse. In reviewing many of the decisions referenced above, none of the fact situations are directly on point. I find that in the case before me and based on the evidence, the issue squarely falls to whether “ineffective counsel” affords an applicant a reasonable excuse. The Respondent/Claimant argues that the court needs to go beyond merely finding “ineffective counsel” and cites a host of decisions from the Ontario Courts where the court’s position may vary in its consideration of relief depending on the nature of counsels’ conduct.

 

158.       In contrast the Applicant’s counsel cites the Nova Scotia Court of Appeal decision of Hiscock v. Pasher, 2008 NSCA 101, in support of the position the court should take when dealing with applications of this nature. The Hiscock decision dealt with an order dismissing an action taken by the Prothonotary under the Civil Procedure Rules. The chambers judge was presented with evidence sufficient to satisfy the court that the reason the appropriate action had not been taken was a result of (or fault of) the Applicant’s legal counsel and therefore upheld the Prothonotary’s original action to dismiss the matter. On appeal the court reversed the decision of the chambers judge and reinstated the action. In rendering the decision it stated:

 

“Hiscock was not personally responsible for the delay.  She attempted unsuccessfully to have her lawyer advance the file and twice retained other counsel for assistance.  Furthermore, Hiscock always intended that her action proceed and she was not aware of the notices being sent to her counsel or his lack of response thereto.  The defendant was not prejudiced by the delay.  The chambers judge erred by over-emphasizing the solicitor’s neglect and in failing to consider Hiscock’s lack of blameworthiness in attempting to balance the interests of the parties”.

 

159.       The court in Hiscock goes on to say:

 

“It is important to distinguish between the neglect and delay caused by the plaintiff’s solicitor and the plaintiff’s own failure to pursue her rights.  Even in cases where the solicitor’s conduct is exceptionally careless, if the plaintiff is entirely blameless, the defendant’s motion to dismiss may be unsuccessful if there is an absence of prejudice to the defendant.”

 

160.       The court again at paragraph 27 of the Hiscock decision stated:

 

[27]  Although in some cases the negligence and ineptitude of the plaintiff’s lawyer might be a pivotal consideration, especially in a case where the plaintiff is more experienced, it should not become the predominant factor in balancing the relevant circumstances on an appeal of a Rule 28.11 order.  With respect, the chambers judge erred by over emphasizing Mr. McMahon’s neglect and in failing to consider the plaintiff’s lack of blameworthiness in attempting to balance the interests of the parties”. 

 

161.       While the nature of the application dealt with by our Appeal Court was different as to its origins, I find that nonetheless the court was called upon to exercise its discretion in determining whether the evidence was sufficient to invoke the principles of natural justice insofar as determining whether a party is entitled to a second shot.  From the authorities presented to me, there is none which specifically dealt with a similar application where the courts overturned a small claims court quick judgment based on the negligent conduct of the applicant’s legal counsel.  Therefore, I find the Hiscock decision relevant to the extent of understanding the view taken by our court as to how one should exercise their discretion in the event that the delay is one solely at the hands of legal counsel. In that particular case it appears the determination was that the sole blame for the missed deadline was attributable to the conduct of the parties’ legal representation.

 

162.       Further in the Hiscock decision the court makes the following comments:

 

[22]  As the cases dealing with Rule 28.13 indicate, dismissal for want of prosecution is an extreme remedy and the plaintiff should not lightly be deprived of her day in court.  (See:  Goodwin v. Rodgerson, para. 19 and Moir v. Landry, p. 284). 

 

163.       In reviewing the evidence of both Mr. and Mrs. King and on behalf of the Corporate Defendant which they controlled, I find there is no evidence to suggest that they did or did not do anything that could have prevented the actions or non-actions taken by their counsel which has led to this Application. I am satisfied that they too were misled by Mr. McKeough either directly or through the representations he had made to Mr. Brogan. I have considered the evidence as to how they became involved in this action, the various legal documents personally served upon them, when and what they did with them and find nothing that allows me to determine that they would have known or ought to have known that a Defence and Counterclaim had not been filed or that they ought to have taken a different course of action. The evidence confirms that “none” of the applications for quick judgments had been personally served on them. I accept their evidence that Mr. McKeough assured them that everything was okay, not to worry.  Given the nature of this Application, there was virtually no evidence as to the type or level of communication between legal counsel and the Applicant/Defendants. The court, from the evidence, senses there was minimal, if any. For certain there was no evidence that the Applicants received any direct correspondence from their lawyers which contained any notice of applications for quick judgments, the court’s July written decision or the subsequent notices sent from the court to Mr. McKeough. The court acknowledges Mr. McKeough’s unsolicited email sent to Mr. Trider in November 2018 and while no accompanying documentation or proof was advanced by him as suggested in his email, even if there was the slightest truth to what he says about Mr. Brogan’s efforts to delay this matter, I find the evidence supports that after March 2018, after the Intact claim was resolved, there would not have been any logical reason to refrain or delay in responding to these pleadings advanced. Clearly, the Respondent/Claimant was diligent in pursuing their claim from the outset and there was no suggestion from the evidence that it was going to go away on its own. In fact I find to the contrary.

 

164.       Therefore I find as to whether there is a reasonable excuse, the evidence relating to the conduct of legal counsel is the only factor to be considered. Given the directions provided to the Applicant/Defendants by their counsel that the matter was withdrawn I cannot attribute any blame to them for what transpired leading up to the issuance of the Quick Judgment.  On this front, again based on the evidence, I find the actions or lack of action by the Applicant/Defendants’ legal counsel, primarily Mr. McKeough, to have been negligent and was the sole reason as to why a Defence had not been filed under the rules.

 

165.       Before reviewing further the law as to whether a missed deadline because of inadvertent/negligent legal counsel provides the basis for a reasonable excuse, through the submissions of counsel dealing with this issue the Applicant/Defendants question whether this court is able to consider decisions on this issue from the Ontario Supreme Court. The Respondent/Claimant argues that the lease which is the subject matter of the claim provides a provision that the applicable law governing the lease is the jurisdiction of Ontario unless otherwise directed by the Lessor (Respondent/Claimant).

 

166.       The court finds that the jurisdiction provision set forth in the lease is not applicable to the matter before the court. The principal issue being determined by this court arises from an Application under the provisions of the Small Claims Court Act. The court in interpreting this legislation properly receives guidance from Nova Scotia jurisprudence, particularly the Supreme Court Trial Division which, by legislation, is the only Court of Appeal from decisions rendered by the Small Claims Court. This Application does not require this court to interpret the lease other than to have identified and acknowledged its existence in relation to satisfying itself that the required threshold of evidence that was required existed when it had addressed the Application for Quick Judgment. Counsel for the Applicant/Defendants argue that Ontario Law on the issues before the court and notably its predominant view as it relates to dealing with issues involving inadvertent or negligent legal counsel ought not be considered as they express a different view than the Nova Scotia Supreme Courts. I find that this court, as with any court, is not prevented from viewing any reported decisions or legal writings from most any jurisdiction if it deems it helpful in formulating its discretion and rendering an appropriate decision arising from the evidence before it. However, it is acknowledged that in doing so the legal principles that are applied to any decision rendered must be in conformity with established principles of law arising from the jurisdiction of the courts under which the statutory authority of the Small Claims Court of Nova Scotia is derived.

 

167.       With reference to the Mullick decision referred to above, that decision referred to the decision of Marissink v.. Kold-Pak Inc. (1993), 125 N.S.R. (2d) 203 (N.S.C.A.).  In citing a passage from that decision, the adjudicator in Mullick  at paragraph 10 stated:

 

“A default judgment was set aside by our court of appeal on the basis that – a client should not be deprived of its right to defend because of the fault of its solicitor.  Although Crawford and Company was the Halifax Regional Municipal’s agent, in its action bind the principal, I am not persuaded that the situation is unlike that of a solicitor who fails to enter a defence.  Not only our court of appeal, but other courts, both on the appeal level and the trial level across Canada have held that the fault lies with the solicitor, or in this case the agent and not the client.  Therefore, the client should not be deprived of its right to defend solely because of that solicitor or agent’s fault.”

 

The Respondent noted that the Mullick decision dealt with the inadvertence of a recognized agent and not a solicitor. 

 

168.       The thrust of the Respondent/Claimant’s argument against this application is that legal counsel acted in the capacity as “agent” for the party (Applicant/Defendants). The Respondent/Claimant argues that the conduct of legal counsel was in relation to the matter in which they were retained and therefore any actions or inactions of the Applicant/Defendants’ agent should be seen as their own actions.

 

169.       The Respondent/Claimant’s counsel presented in their submission a host of reported Ontario cases regarding a variety of circumstances which, at the foundation of the court’s ruling, rested on not exercising their discretion to provide any relief because of delays or lack of action in not filing a defence because of the negligence or inadvertence of counsel. 

 

170.       The thread line of decisions provided a review of several Ontario Court of Appeal decisions, particularly in situations where a solicitor’s conduct was not merely inadvertent, and therefore the fact that the plaintiff would not be left without a remedy.  Of particular note was the decision of Marché d’Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd., 2007 ONCA 695 (Ont. C.A.).  In that particular decision the court of appeal acknowledged that…”the law would not ordinarily allow an innocent client to suffer the irrevocable loss of the right to proceed by reason of inadvertence of his or her solicitor”.  However, the court went on to conclude that the finding of a failure as a result of inadvertence of counsel is not in itself a reason for relief.  In this particular decision it found such an assumption faulty to determine that where a solicitor’s conduct is not mere inadvertence, but amounted to conduct very likely to expose the solicitor to liability to the client, this then becomes different for the court.  It found in such a case, that refusing the client an indulgence for delay would not necessarily deny the client of a legal remedy.

 

171.       In the Nova Scotia Court of Appeal decisions reviewed, again while the applications before the court were advanced for different reasons, at the heart of each was the need for the Applicant to satisfy the court that they had a reasonable excuse.  The few reported cases dealt with the inadvertent negligence of counsel and therefore there was no need for our court to be challenged with having to distinguish between what can be characterized as legal counsel’s “simple negligence versus gross or intentional negligence”.  I find the facts in this case are tantamount to the latter.  Although there is insufficient evidence before this court to determine any rational reasoning for the conduct of Mr. McKeough, clearly there was ample opportunity before the Quick Judgment was ever issued for him to simply fess up and acknowledge that he had inadvertently made a mistake in connection with his actions in handling his clients’ file matter now before the court. Rather, his position is principally one of denial, pointing the finger at Mr. Brogan for being responsible for the inactions. 

 

172.       The more succinct issue, having regard to the views presented by the Ontario Court of Appeal, is whether, the “water on the beans”, so to speak, changes based on my findings that legal counsel appear to have purposely (albeit unexplainably) misled his colleague, the client and the court, all of which lead to there having been no Defence filed. Again, while it is unexplainable why he would have done this and appreciating he is only a few years out practicing law, there has been ample opportunity for him to save himself so to speak.  Likely the easiest and quickest would have been to simply file a Defence after the decision on the second Quick Judgment had been rendered. It was likely the case at that stage that he was boxed in by having already told Mr. Brogan the matter had been withdrawn.

 

173.       The court has struggled with this decision in the face of the conduct of Mr. McKeough. In fact it was Mr. McKeough’s evidence that challenged the court with the need to go much farther into the background evidence than it otherwise would have. The bottom line was the need to determine which version as between the two lawyers was found to be truthful as the outcome directly affected this court’s determination as to whether there existed a reasonable excuse. The court also recognizes that these facts are exceptional and while other remedies may exist, that is not something this court can be certain of. Ultimately, I find this court owes its primary duty to the Applicant/Defendant to assess this Application through the eyes of the Applicant/Defendants having regard to all of the evidence presented. Clearly, the Applicants/Defendants may be characterized as innocent victims of the actions of their legal counsel. The reasoning for this decision is not intended to grant a “free pass” in any situation where legal counsel is found to be negligent. I find that to not afford such conduct to be considered a reasonable excuse there must be found some nexus between the actions of counsel and those of the Applicant/Defendant such that an Applicant/Defendant knew or ought to have known a rule of the court has not been complied with. The evidence before me does not present that nexus. The court finds that the principles of natural justice must prevail in determining whether I am satisfied in this instance that the failure to act by Messrs. Brogan and/or McKeough is sufficient to afford the Applicant/Defendant a “reasonable excuse”. Based on the evidence I find that to be the case and the Applicant/Defendant has satisfied me that they do have a reasonable excuse.

 

174.       Further, having made the foregoing determination, the court will now assess whether the two common law principles associated with applications of this nature, that being whether the evidence satisfies the court that there is an arguable defence and further whether the Respondent/Claimant would be prejudiced by the decision to overturn the court’s Quick Judgment. 

 

175.       The court is satisfied from the evidence that there is an arguable issue and defence. Clearly, it remains undisputed that the Applicant/Defendant suffered a loss by fire in late 2014. The paper evidence tendered in connection with each application for Quick Judgment confirmed a contract did exist and part of the consideration being paid was insurance premiums by the Applicant/Defendant. There is further evidence both in the exhibits tendered and from Mr. Brogan that some information/response to the insurance company’s request had been sent on behalf of his client. This is denied by the Respondent/Claimant. I find it well accepted law that the threshold is low as to any determination on this issue. It is not this court’s task to make final determinations on any of these obvious issues, but to recognize from the evidence that there are arguable issues in play. Clearly, at the heart of the main issue will be whether the Applicant/Defendants breached their obligations under the terms of Lease but that will be for another court to determine. I find, having regard to the principal claim and based on the evidence that there appears to be an arguable issue and thus Defence to the claim advanced.

 

176.       As for the issue of prejudice to the Respondent/Claimant, if this Application is accepted and the Quick Judgment overturned the court has determined the following. From the evidence the original loss which remains at the heart of this dispute occurred back in 2014. The evidence was sufficient to confirm that the relationship between the Respondent/Claimant and the Applicant/Defendant was that of Lessor-Lessee as it related to the equipment owned by the Respondent/Claimant and under lease to the Defendant. The evidence further confirms that there was insurance held by the Respondent/Claimant on its property/equipment and the costs of this were passed through to the Applicant/Defendant. The evidence confirmed that the insurance company “chased” the Applicant/Defendant for approximately 12-14 months following the reported loss in efforts to complete their investigation and they received no reply from the Applicant/Defendant. The evidence confirms the insurance company denied coverage in 2016.

 

177.       The evidence further confirms that during this period of time the Applicant/Defendant was involved in a collateral insurance claim with Intact Insurance arising from the same loss which led to a settlement in the spring of 2018. Therefore, I find that the Applicant/Defendant would have clearly been aware of their obligations insofar as cooperating with any required investigations which are customary with most every type insurance claim. They chose to ignore these demands and their evidence was that they left them unattended until the spring of 2017 when they engaged Mr. Brogan to deal with a response. However, at that point the insurance claim with Great American had been denied for several months. It is now almost four and one-half years from the date of the loss. The court accepts that it is a reasonable assumption that some of the witnesses and indeed “physical evidence” associated with the loss may not be available with this passage of time however no evidence was provided in this regard. The court finds that the ability for there to be any meaningful investigation attributable to the fire itself has been compromised from this passage of time and the Applicant/Defendants’ unwillingness to cooperate. The court does not have to determine what the outcome of any investigation may have been but merely whether this approximately 12 months since the filing of the Amended Claim to this point in time gives rise to some level of prejudice to the Respondent/Claimant.

 

178.       I find that having regard to the evidence setting forth the history of this claim since the outset, focusing on the point in time when this claim was originally commenced (2017) and later amended (March 2018), I find the Respondent/Claimant would be in no worse position dealing with a new hearing date than they were at the commencement of these proceedings. At the time in which this claim was advanced there had already been a significant period of time after the fire and the Insurance Company’s denial had taken place. If, as the Respondent/Claimant advances, the Applicant/Defendant breached their obligations under the Lease and in turn the provisions of insurance, this passage of time will not alter or prejudice their claim. My sense is that the one most likely prejudiced by this passage of time may well be the Applicant/Defendant.

 

179.       Upon conclusion, the court is satisfied that there is a reasonable excuse, there is an arguable Defence and the Respondent/Claimant would not be sufficiently prejudiced in advancing their claim should the court’s initial judgment be overturned. Therefore, I order that the Application is granted, the judgment overturned and the matter is to be re-scheduled for hearing. The Court further orders that the 20-day period of time for filing a Defence shall commence upon the Applicant/Defendant receiving Notice from the Court of the new hearing date.   

 

DATED at Sydney, Nova Scotia this 16^th day of July, 2019.

 

A. ROBERT SAMPSON, Q.C.

Adjudicator