CITATION: 1565703 Ontario Limited v. St. Clair Tavern (Sarnia) Limited, 2011 ONCA 523

DATE: 20110718

DOCKET: C53378

COURT OF APPEAL FOR ONTARIO

Laskin, Simmons and Epstein JJ.A.

BETWEEN:

1565703 Ontario Limited

Plaintiff (Respondent)

and

St. Clair Tavern (Sarnia) Limited

Defendant (Appellant)

Carolyn Brandow, for the appellant

Jennifer Quick, for the respondent

Heard: July 15, 2011

On appeal from the order of Justice Joseph M. Donohue of the Superior Court of Justice, dated January 28, 2011.

APPEAL BOOK ENDORSEMENT

[1] We are not satisfied that the respondent properly proved its default judgment. Although this issue was not raised before the motion judge, it is in the interests of justice to set aside the default judgment to permit the appellant to contest the quantum of the respondent’s claim. The appellant will then be at liberty to pursue its claim for rental arrears as a counterclaim in the litigation. In the light of the delay in this action already, the appellant must deliver its statement of defence and any counterclaim within 10 days of the entry of this order.

[2] In order to protect the respondent’s position we think it appropriate that any writ of execution that is filed in respect of its default judgment remain on title.

[3] As the issue on which we are setting aside the default judgment was not raised before the motion judge, we think that the respondent is still entitled to the costs of the motion. However, in our view, the motion judge erred in awarding substantial indemnity costs. We vary these costs to $8,336.13, inclusive of disbursements and applicable taxes. The respondent is also entitled to its costs thrown away of obtaining the default judgment.

[4] The appeal is allowed and the default judgment is set aside on the terms set out in this endorsement. In the circumstances there shall be no costs of the appeal.