Howard C. Cohen

The plaintiff brought an undefended action seeking repayment of loans advanced to the defendants for financing a film project.

The loans were evidenced by a promissory note executed in 1997, providing for repayment of $78,000 with interest at 21% per annum.

Evidence established that the corporate defendant and its principal executed the promissory note and that the individual defendant personally guaranteed the debt.

The court accepted testimony and documentary evidence confirming the loan, partial repayments totalling $10,500, and an acknowledgment of the debt.

Judgment was granted for the outstanding balance of $67,500 plus contractual interest and substantial indemnity costs.

The applicants sought further relief in an ongoing Commercial List proceeding involving the appointment of a manager over several corporations.

A respondent argued that the court was functus officio because the earlier order appointing the manager was final, invoking cause of action estoppel.

The court rejected this argument, emphasizing that receivership or management orders are inherently ongoing and include come‑back clauses allowing parties to seek further directions.

The judge held that such orders are intended to function as a “living declaration,” and that additional relief or amendments to the application could be considered without requiring a new proceeding.

The preliminary objection was dismissed and the court retained jurisdiction to hear further matters in the proceeding.

The defendants moved to set aside a default judgment obtained by the plaintiffs in a fraud action.

The court found that the default judgment had been obtained after procedural irregularities, including the plaintiffs noting the defendants in default and obtaining judgment without notice while a motion to strike the statement of claim was pending and after the action had been dismissed as abandoned.

Relying on established authority, the court held that where a default judgment is obtained while a motion affecting the pleadings is before the court, the defendant is entitled to have the judgment set aside as of right without demonstrating a defence on the merits.

The court declined to require the defendants to pay security despite the plaintiffs’ concern about a potential bankruptcy affecting the fraud claim.

The judgment was set aside and procedural deadlines were imposed requiring the defendants to either bring their motion to strike or deliver a statement of defence within 30 days.