Court File and Parties

Court File No.: CV-14-498053 Date: 2016/05/24

Superior Court of Justice - Ontario

Re: Champion Laboratories (Europe) Ltd. v. GQI Technologies Inc. and Agha et al.

Before: Master Graham

Heard: May 3, 2016

Counsel: L. Hansen, for the plaintiff R. Hine, for the defendants Amer Agha aka Emilio Agha and GQI Technologies Inc. (moving parties)

Reasons for Decision

(Defendants’ motion to set aside default judgment)

[1] The plaintiff’s action is for collection of the sale price of gas turbine filters sold to the defendants for distribution in Saudi Arabia. The total claim is for the Canadian dollar equivalent of $457,066.88(U.S.). The defendants failed to defend the action and default judgment was signed by the registrar on June 13, 2014 for $499,363.29 (CAN) plus $1,850.00 for costs. The moving defendants now seek an order setting aside the default judgment.

[2] The motion is brought under rule 19.08(1) of the Rules of Civil Procedure:

19.08(1) A judgment against a defendant who has been noted in default that is signed by the registrar or granted by the court on motion under rule 19.04 may be set aside or varied by the court on such terms as are just.

[3] The court’s discretionary decision as to whether to set aside the default judgment pursuant to rule 19.08 is based primarily on the following three-part test:

(1) Whether the motion was brought without delay after the defendant learned of the default judgment; (2) Whether the circumstances giving rise to the default were adequately explained; and (3) Whether the defendant has an arguable defence on the merits.

See: Morgan v. Toronto (City) Police Services Board (2003), 34 C.P.C. (5th) 46 (Ont. C.A.) and HSBC Securities (Canada) Inc. v. Firestar Capital Management Corporation, 2008 ONCA 894 at paragraph 21.

[4] The following additional principles also apply:

(1) The factors should not be applied rigidly. A failure to satisfy a factor, such as an adequate explanation for the default, may not prevent relief if there is an arguable case on the merits and the motion is brought promptly; (2) Where it is apparent that there exists a strong defence, failure to satisfy the two other factors may not prevent relief; (3) Clearly, the merits issue is the most significant factor. If a party can be made whole in costs, and is not prejudiced, the merits issue will often, but not necessarily carry the day for the defaulting party.

See: Valente v. The Personal Insurance Company, 2011 ONSC 516 (Div. Ct.) at paragraph 42.

[5] The standard for demonstrating a defence on the merits is as follows:

“In showing a defence on the merits, the defendant need not show that the defence will inevitably succeed. Rather, the principles applied on a motion for summary judgment should be considered. To set aside a default judgment, the defendant should show that his or her defence has an air of reality and that there is a genuine issue requiring a trial.”

See: Watkins v. Sosnowski, 2012 ONSC 3836 at paragraph 24.

[6] The history of the litigation is as follows:

February 7, 2014: The statement of claim was issued. April 3, 2014: The defendant Emilio Agha was served personally with the statement of claim after making himself available for personal service in the lobby of the building at which his Toronto office is located. June 13, 2014: Default judgment was signed against Emilio Agha and the GQI Technologies defendants (“the defendants”). July 25, 2014: A Notice of Garnishment was issued. August 5, 2014: The Notice of Garnishment was sent by mail to Emilio Agha’s Toronto office. September 16, 2014: A Notice of Examination in Aid of Execution returnable November 6, 2014 was served on Emilio Agha by mail to his Toronto office. October 28, 2014: Counsel for the plaintiff sent Mr. Agha a copy of the Notice of Examination by email. Mr. Agha acknowledges that he received this message. Mr. Agha deposes that this was the first occasion on which he learned of the default judgment. November 5, 2014: Counsel for Mr. Agha, Mr. Hine, contacted plaintiff’s counsel by telephone with respect to the Notice of Examination. December 15, 2014: Mr. Hine served a notice of motion for a motion returnable March 16, 2015 to set aside the default judgment. March 9, 2015: Mr. Hansen wrote to Mr. Hine to bring to his attention the fact that no motion record with supporting affidavits had been served. March 11, 2015: Mr. Hine replied stating that he had been out of communication with Mr. Agha but was now prepared to serve motion materials and that he was seeking to adjourn the motion to July, 2015. The plaintiff consented to the adjournment without prejudice to its rights to argue that the defendants delayed unduly in bringing the motion. The motion was adjourned to July 21, 2015. May 19, 2015: Mr. Hansen requested a copy of the defendants’ motion record along with tentative dates for cross-examination on the anticipated supporting affidavit. July 21, 2015: The motion did not proceed as, without explanation, no motion record was served. November 16, 2015: The moving defendants served their notice of motion for this motion to set aside the default judgment, returnable February 22, 2016. November 23, 2015: The plaintiff brought a motion returnable on this date to compel Mr. Agha’s attendance at an examination in aid of execution. This motion was resolved by way of a consent order amending the title of proceedings and the statement of claim. February 10, 2016: The moving defendants served the motion record for this motion, returnable February 22, 2016. February 22, 2016: The motion was adjourned by Master Abrams to May 3, 2016, peremptory to the moving defendants, with costs of $1,000.00 awarded against them.

[7] I will now consider each of the three factors from Morgan, supra.

Was the motion brought without delay?

[8] The default judgment was signed on June 13, 2014 and for the purpose of this analysis, I accept that the defendant Agha did not learn about the judgment until receiving plaintiff’s counsel’s email on October 28, 2014. Although Mr. Agha scheduled motions to set aside the default judgment to proceed on March 16, 2015 and July 21, 2015, no material was served in respect of either of these dates. The notice of motion for the motion that was finally argued was served on November 16, 2015 and the motion record was served on February 10, 2016. Accordingly, the moving defendants did not take meaningful steps to bring the motion until more than a year after learning of the default judgment.

[9] The defendants do not dispute the period of delay but submit that there are extenuating circumstances that explain it. In his affidavit sworn February 10, 2016, Mr. Agha describes various challenges in his personal life since August 2013 when his wife was 7 months pregnant and coping with a high risk pregnancy. After his wife gave birth on October 9, 2013, she immediately requested a separation. Mr. Agha then spent January to April 2014 in Saudi Arabia to spend time with his wife and her family in an attempt at reconciliation. His marital relationship deteriorated further after they returned to Canada in April 2014. He states that at this point, “I was emotionally distressed and unable to respond to the statement of claim”.

[10] As of the swearing of his affidavit, Mr. Agha and his wife had not reconciled and she and her family had prevented him from seeing their child for several months. He also deposes that his father-in-law is a powerful figure in Saudi Arabia who exerted political pressure to prevent him from renewing his visa in Saudi Arabia as a consequence of which he has relocated to Bahrain to guarantee his safety after receiving numerous physical threats.

[11] Mr. Agha further states that he has continued to experience significant emotional stress and was prescribed antidepressants “last year”; based on the affidavit being sworn on February 10, 2016, presumably the medication was prescribed in 2015.

[12] Mr. Agha further deposes that at the same time as his wife was coping with her pregnancy, he experienced difficulties with several of his professional projects, including with that involving the plaintiff Champion Laboratories. He also suffered “an irreparable computer failure” which prevented him from collecting the documentary evidence and other information required to complete his affidavit and statement of defence.

[13] Essentially, Mr. Agha submits that subsequent to learning of the default judgment on October 28, 2014, he immediately retained counsel and initiated steps to have the default judgment set aside. It is true that he retained counsel promptly on learning of the judgment but, as indicated, the motion before the court was not brought until more than a year later. The issue is whether the various circumstances described by Mr. Agha constitute sufficient reason for this lengthy delay.

[14] The defendants’ submission on the motion was that after retaining counsel, Mr. Agha needed to provide him with information with respect to his failure to defend but was somehow prevented from doing so by his marital problems and eventual breakdown, his apparent treatment for depression and his move from Saudi Arabia to Bahrain.

[15] The problem with the defendants’ evidence and submissions is that, although Mr. Agha clearly experienced various personal problems in his life, he provides only limited evidence connecting those problems with the delay in bringing this motion and more specifically with the failure to proceed with the first two motions scheduled. After learning of the default judgment on October 28, 2014 he had the wherewithal to contact a lawyer to instruct him to move to set aside the default judgment and a notice of motion was served in that regard on December 15, 2014, but there is no specific evidence as to why a motion record was not prepared and served in time to argue the motion on the first scheduled date of March 16, 2015. Similarly, although the motion was adjourned to July 21, 2015, there is no specific explanation as to why no motion record was prepared and served in time for the motion to be argued on that date. Finally, after the motion did not proceed on July 21, 2015, there is no explanation for the further delay until November 16, 2015 when another notice of motion was served.

[16] In addition, although Mr. Agha alleges significant emotional stress for which he was prescribed antidepressants, he has provided no medical documentation whatsoever to substantiate any medical condition or a connection between any such condition and his alleged inability to take more prompt action in the litigation.

[17] In summary, although there is general evidence of upheaval in Mr. Agha’s life there is no specific evidence of what he attempted to do to have the default judgment set aside in the 12.5 months between October 28, 2014 and November 16, 2015 and why the motion could not proceed on one of the earlier dates scheduled. As a result, I conclude that there was a lengthy delay of over a year in bringing this motion and this delay has not been adequately explained.

Were the circumstances giving rise to the default adequately explained?

[18] The record contains numerous emails from November, 2013 between the plaintiff and the defendant Agha regarding payment for the plaintiff’s invoices. On December 11, 2013, plaintiff’s counsel sent a letter to Mr. Agha to two different addresses stating that he had been retained by the plaintiff to assist with the collection of the amount owing. This letter was delivered personally to Mr. Agha on December 12, 2013. Mr. Agha was informed by plaintiff’s counsel by email on February 27, 2014 that a process server was attempting to serve the statement of claim and on February 28, 2014, Mr. Agha replied by email stating that he would make himself available for service on April 3 or 4, 2014. Mr. Agha was therefore well aware that there was an action commenced against him and of the nature of the action.

[19] Mr. Agha submits that as he was unrepresented at the outset, he did not fully understand the possible consequences of failing to respond promptly to service of the statement of claim on April 3, 2014. He further submits that the plaintiff should have informed him of any such consequences.

[20] Mr. Agha’s contention that he did not know what would happen if he failed to defend the action seems disingenuous. In his first supporting affidavit, he deposes that he is “an entrepreneur, mechanical engineer and businessman”. Both of his affidavits are in English and there is no suggestion in either of them that he is not fluent in English. He therefore has sufficient sophistication and education to read and understand the statement of claim.

[21] The statement of claim with which Mr. Agha was served is in the form prescribed by the Rules of Civil Procedure and contains the following standard passages, with capital letters, as follows:

A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the plaintiff. The claim made against you appears on the following pages.

IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiff’s lawyer(s) or, where the plaintiff does not have a lawyer, serve it on the plaintiff, and file it, with proof of service, in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario. . . .

IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE.

[22] Given the prominence of the warning, starting on the first page of the statement of claim, stating the possible consequence of a defendant’s failure to defend the action within 20 days of service, it ought to have been abundantly clear to Mr. Agha that if he failed to defend the action, judgment could be rendered against him.

[23] The defendants submit that their failure to defend the action following service of the statement of claim resulted from the same assortment of Mr. Agha’s personal problems to which he attributes his failure to move promptly to set aside the default judgment. They further submit that in making himself available for personal service of the statement of claim, Mr. Agha acted in good faith and displayed an intention to participate in the defence of the action against him. It was therefore incumbent on plaintiff’s counsel to contact him to see what his intentions were and to warn him that he would be noted in default if he did not defend.

[24] If Mr. Agha had contacted plaintiff’s counsel after receiving the statement of claim and asked for additional time to defend, then he would have a reasonable argument that the plaintiff should not have proceeded to default judgment without a further warning. But Mr. Agha did not do that. In fact, after receiving personal service of the statement of claim on April 3, 2014, in the context of various communications informing him that the plaintiff was seeking payment from him, he did absolutely nothing until more than six months later, after receiving notice of the default judgment by email. The personal problems that Mr. Agha was experiencing did not give him licence to completely ignore the statement of claim particularly where the plaintiff did nothing to lead him to believe that it would not take steps to proceed to default judgment in the event of the defendants’ default.

[25] Accordingly, I do not accept that the moving defendants have adequately explained the default.

Do the defendants have an arguable defence on the merits?

[26] Mr. Agha’s first affidavit, sworn February 10, 2016, addresses only the reasons for the default and the delay in moving to set it aside. He does attach a proposed statement of defence but a pleading is not evidence that would give rise to a defence on the merits.

[27] In Mr. Agha’s second affidavit, sworn February 17, 2016, in which he specifically states that he has read the affidavit of Carrie Kennedy dated February 16, 2016 delivered on behalf of the plaintiff, he deposes that the contract that forms the basis of the action was between his company GQI and Eurofilter (Air) Filters Limited, as opposed to the named plaintiff Champion Laboratories (Europe) Ltd. He states that he does not understand why Champion was able to obtain a judgment against him.

[28] Mr. Agha further deposes that in October, 2011 he was approached by Paul Lyons, “Champion’s” Director and General Manager, to assist in re-establishing it in the market for gas turbine filters in the Middle East. He states that Lyons did not tell him that Eurofilter had previously sold inferior filters to the Saudi Electrical Company (“SEC”) which had then refused to purchase further products from Eurofilter.

[29] Subsequent to further communication on July 5, 2012, Mr. Agha and Mr. Lyons negotiated an oral agreement whereby the defendant GQI Technologies would bid on a contract to supply a company called Tecmo Arabia Ltd. with gas turbine filters and related products that were to be manufactured and shipped by Eurofilter, a division of the plaintiff Champion Laboratories. If the bid were successful, Eurofilter would supply Tecmo with the filters which Tecmo would in turn sell to the SEC. Eurofilter would also supply GQI with filters to be sold on consignment.

[30] Eurofilter was responsible for ensuring that each shipment was properly documented, including providing “Letters of Support” required to enable the shipments to clear Saudi customs. GQI would provide Eurofilter with a purchase order for each shipment of filters.

[31] Mr. Agha further deposes that Mr. Lyons informed him that the filters to be shipped by Champion met the standards required by the SEC and by other potential customers in Saudi Arabia and were designed to fit the standard gas turbines in use throughout Saudi Arabia. However, after shipments of the filters arrived in Saudi Arabia, he discovered that the filters did not fit the gas turbines in use throughout most of the country including those used by the SEC. As a result, the filters were very difficult to sell to Saudi Arabian businesses.

[32] Mr. Agha deposes that in addition, many of the shipments of filters were late and some of the shipments were held up in customs because the plaintiff failed to provide the required Letters of Support. As a result, the SEC refused to accept the late delivery of filters and refused to purchase filters not accompanied by Letters of Support and Tecmo refused to pay the defendants for filters that were not accepted by the SEC. As the filters did not fit Saudi Arabian gas turbines, very few filters were sold on consignment. Mr. Agha has asked Mr. Lyons to arrange for the return of the unsold filters, which are stored in a warehouse, but he has refused to do so. Mr. Agha denies that any money is due and owing to Champion.

[33] Mr. Agha deposes that Champion’s representatives did not take any steps to respond to his complaints regarding the quality and dimensions of the filters and the timeliness of their delivery. He provides no particulars or supporting documentation with respect to any such complaints.

[34] In response to the motion, the plaintiff has delivered an affidavit from Carrie Kennedy, sworn February 16, 2016, referred to above. Ms. Kennedy is a lawyer at the firm representing the plaintiff. She deposes that any information not in her personal knowledge is obtained from Paul Lyons, who as acknowledged by the defendants, is Champion’s director and general manager. Defendants’ counsel made no objection to any of the evidence in the Kennedy affidavit on the grounds that it was based on Ms. Kennedy’s information and belief.

[35] Ms. Kennedy deposes that the plaintiff began providing filters to the defendants in July, 2012. Copies of the defendants’ purchase orders marked as exhibits to the affidavit indicate that the defendant “GQI Technologies O/A TurboStar Engineering” ordered various quantities of filters from “Champion Laboratories (Europe)”. This is consistent with the “Order Acknowledgements” from the plaintiff attached as an exhibit to Mr. Agha’s second affidavit, which bear the headings “EUROFILTER” and “Eurofilter Division, Champion Laboratories (Europe) Ltd.”.

[36] Ms. Kennedy also deposes that the plaintiff honoured the purchase orders received from the defendants. She further states that Mr. Agha told Mr. Lyons that he had sold $139,339.24 USD of the product to his customers but nonetheless did not pay the plaintiff.

[37] Ms. Kennedy deposes that in a telephone call with Mr. Lyons on or about November 19, 2013, “Mr. Agha agreed to make an interim payment of $176,530.32 USD and that the plaintiff would take back some of the product which it had provided”. This payment was to be made by November 22, 2013, but was not made by that date. Mr. Agha again indicated that the payment would be made on November 29, 2013 but again the payment was not made nor was it ever made. Further, Mr. Agha was to arrange for the necessary paperwork to be completed, including a document called an Al Bayan certificate, so that the product could be removed from Saudi Arabia but he never did so.

[38] Attached as exhibits to Ms. Kennedy’s affidavit are a series of emails between Mr. Lyons and Mr. Agha between November 19, 2013 and November 28, 2013 relating to the plaintiff’s attempts to obtain payment for its product. The significant extracts from these emails are as follows:

• November 27, 2013: Mr. Lyons wrote “The payment you promised for the end of last week has not been received and there is no sight of it in the banking system.. . . The discussion last week and subsequent agreement to make a minimum payment whilst we discussed the obstacles to a full agreement was going to allow me to retain some control over the outcome. Please help me by processing the amount you agreed to.” Mr. Lyons states in the same email that “I know we are both keen to get this stock moved from the warehouse and really do need [the Al Bayan Certificate] . . .”.
• November 28, 2013: Mr. Agha wrote “Hi Paul, sorry for missing your call earlier. We need an extension till this Fri. We’re working on obtaining the Al Byan [sic] certificate through the shipping company.”
• November 29, 2013: Mr. Lyons wrote: “Emilio I am sorry to press the point, but it would help me if you, or one of your people, could send me details of the payment that will be processed today as soon as it is done please.

[39] These emails are all consistent with the evidence that Mr. Agha promised on November 19, 2013 to make a payment on November 22, 2013. When writing on November 28, 2013 Mr. Agha never denied that he agreed to make a payment and simply stated that he required an extension.

[40] It is significant that Mr. Agha’s second affidavit, sworn February 17, 2016, was prepared and sworn in response to Ms. Kennedy’s affidavit. In that affidavit, Mr. Agha deposes that Mr. Lyons has refused to arrange for the return of the filters stored in a warehouse and baldly denies that any money is due and owing to Champions. However, despite the fact that he is responding to the Kennedy affidavit, Mr. Agha never denies the assertion in that affidavit that on November 19, 2013, he agreed to a partial payment of $176,530.32 USD and that he has never paid any amount in satisfaction of the plaintiff’s accounts. The totality of the evidence on this issue indicates that Mr. Agha did agree to this partial payment.

[41] The plaintiff’s lawyer also sent a demand letter to Mr. Agha addressed to two different addresses, on December 11 and 13, 2013. This was the letter that was personally delivered to Mr. Agha on December 12, 2013. Ms. Kennedy deposes that Mr. Agha did not respond to this letter and in his affidavit of February 17, 2016, Mr. Agha does not deny that he received the letter.

[42] Finally, Mr. Lyons, in his November 27, 2013 email, acknowledges that both parties want to move the unsold stock from “the warehouse” and Mr. Agha, in his November 28, 2013 email, recognizes the need for the “Al Bayan” certificate.

[43] The plaintiff has also delivered an affidavit from Craig Ball, the plaintiff’s finance director, sworn and served by courier on April 21, 2016. Defendants’ counsel submits that although this affidavit was served more than four days before the hearing and therefore in accordance with the time period stipulated by the rules (rule 37.10(3)), I should give it no weight as the date of service did not allow for a reply from Mr. Agha who is in Bahrain. Counsel further submits that as the motion date of May 3, 2016 was made peremptory to the defendants, he could not have requested a further adjournment of the motion to allow for the delivery of further reply materials.

[44] I do not accept that the Ball affidavit should be given no weight. First, the plaintiff should not be deprived of the ability to rely on evidence in an affidavit delivered in compliance with the Rules. Second, the obligation on parties seeking to set aside a default judgment on the basis that they have a triable defence on the merits is to “put their best foot forward” in their own material and the defendants ought to have done so in Mr. Agha’s first affidavit of February 10, 2016. Third, on February 17, 2016, Mr. Agha was able to swear an affidavit in response to Ms. Kennedy’s affidavit sworn on February 16, 2016 and there is no explanation for why he could not do the same in relation to the Ball affidavit. Alternatively, if defendants’ counsel wanted to put evidence before the court to contradict or challenge statements in the Ball affidavit it was open to him to do so by way of an affidavit from a colleague who had spoken with Mr. Agha and who could have stated that the evidence was provided on information and belief because a further original sworn affidavit from Mr. Agha himself could not be provided in time for the hearing.

[45] I conclude that it is open to me to consider and rely on the evidence in the Ball affidavit. However, the conclusions that I have reached to this point in these reasons are amply supported by the evidence in the two affidavits from Mr. Agha and the Kennedy affidavit.

[46] Mr. Ball’s affidavit begins with the following general statement: [T]he plaintiff supplied the defendants with filters and other goods and services, the defendants benefitted from selling at least some of them, the plaintiff agreed to take back unsold filters and to work with the defendants with respect to payment, but then the plaintiff was not paid.” As stated above, this statement is also supported by evidence from the Kennedy affidavit which was not disputed in the second Agha affidavit.

[47] Mr. Ball also deposes as follows:

• The plaintiff agreed to take back unsold filters on the receipt of the relevant Saudi customs documentation but none of the defendants would cooperate in the removal of the filters.
• The first occasion on which the defendants alleged any deficiencies in the filters was in February, 2016 in relation to the motion to set aside the default judgment.
• By email of November 20, 2013 to Mr. Agha, the plaintiff indicated its willingness to take back the unsold filters after the defendants obtained the Al Bayan certificate for which the defendants as importers were required to pay. This documentation was never provided and generally, Mr. Agha did not cooperate in enabling the plaintiff to remove the unsold filters from Saudi Arabia.
• He reiterates that in the exchange of email messages in late November, 2013, Agha never says that nothing is owing to the plaintiff.

[48] With respect to Mr. Agha’s statement that Lyons did not tell him that Eurofilter had previously sold inferior filters to the Saudi Electrical Company, Mr. Ball deposes that this “is simply not the case”. He acknowledges an issue known to Mr. Agha involving a product the specifications of which were misrepresented by a supplier and with respect to which testing demonstrated that the product would meet the specifications stated by the plaintiff. He and Mr. Lyons have no documentation with respect to Mr. Agha’s statements that the plaintiff’s products were defective “because it simply is not the case”. Mr. Ball also denies Mr. Agha’s assertion of delays in shipping, although he acknowledges some delays because Mr. Agha appeared to have misrepresented delivery times.

[49] The defendants’ submission that there are triable defences on the merits that warrant the setting aside of the default judgment can be summarized as follows:

• The contract that forms the basis of the action was between Mr. Agha’s company GQI and Eurofilter (Air) Filters Limited, as opposed to the named plaintiff Champion Laboratories (Europe) Ltd.
• Contrary to the representation of Mr. Lyons, the filters supplied by the plaintiff did not fit the gas turbines in use throughout most of Saudi Arabia including those used by the SEC so the filters were very difficult to sell to Saudi Arabian businesses and very few were sold on consignment. In addition, many of the shipments of filters were late and some of the shipments were held up in customs because the plaintiff failed to provide the required Letters of Support.
• The plaintiff has refused to arrange for the return of unsold filters.

[50] Based on my review of the law in paragraphs 3-5 above, the issue is whether any of the defendants’ proposed defences have an air of reality and give rise to a genuine issue requiring a trial (see: Watkins, supra).

[51] As I stated at paragraph 35 above, all of the documents, including the defendants’ own purchase orders, identify the plaintiff Champion Laboratories (Europe) as the vendor of the filters. Therefore, the defendants’ submission that there is a triable issue relating to the identity of the contracting parties based on Mr. Agha’s evidence that the contract was between “GQI Technologies and Eurofilter (Air) Filters Ltd.” has no air of reality and does not give rise to a genuine issue requiring a trial.

[52] The defendants contend that the filters supplied by the plaintiff could not be used with gas turbines in Saudi Arabia, i.e. that they were not suitable for the purpose for which the plaintiff knew they were being supplied, and that there were delays in delivery of the filters; the plaintiff denies that either assertion is true. Other than bald assertions by Mr. Agha, there is no evidence and in particular no documentation substantiating any alleged deficiencies in the filters or delays in delivery. To the contrary, in November, 2013 Mr. Agha made a commitment to provide partial payment which he failed to honour, and which he does not deny, and none of Mr. Agha’s correspondence with respect to the plaintiff’s demand for any such payment suggests that there was anything wrong with any of the filters or the timeliness of their delivery.

[53] The onus on this motion is on the defendants to persuade the court that they have met the applicable test, the most important component of which is to demonstrate a triable defence on the merits. Mr. Agha’s bald assertion of deficiencies in the product and delays in delivery absent hard evidence of any complaints of that nature contemporaneous with his first learning of any such deficiencies or delays, and particularly in the face of his agreement in November, 2013 to make a significant payment for the product in question, does not amount to a defence with an air of reality that would give rise to a genuine issue requiring a trial.

[54] Finally, the defendants raise as a defence the assertion that the plaintiff has failed to arrange for the return of the unsold filters, presumably so that the defendants can be credited with any amounts relating to the cost of those filters. This could plausibly be a defence to a claim for the cost of filters provided on consignment that have never been sold. The plaintiff’s evidence in this regard consists of Mr. Agha’s bald statement that he has asked Mr. Lyons to arrange for the return of the unsold filters, but he has refused to do so.

[55] The weight to be given this bald statement must be considered in the context of the fact that Mr. Agha had for review Ms. Kennedy’s affidavit when he swore his February 17, 2016 affidavit. The evidence in Ms. Kennedy’s affidavit on the issue of the return of the unsold filters is that on the basis of Mr. Agha’s agreement to make an interim payment of $176,530.32 USD, the plaintiff would take back some of its product. Mr. Agha was to arrange for the necessary paperwork to be completed, including the “Al Bayan certificate”, so that the product could be removed from Saudi Arabia but he never did so. The email from Mr. Lyons dated November 27, 2013 includes his statement that they needed the Al Bayan certificate and Mr. Agha’s reply of November 28, 2016 that “we’re working on obtaining the Al Byan certificate through the shipping company”.

[56] Mr. Agha thus acknowledged both the requirement for the Al Bayan certificate in order for the plaintiff to be able to take back the unsold filters and his obligation to obtain it. However, Mr. Agha’s affidavit delivered following receipt of Ms. Kennedy’s affidavit fails to address her evidence that he was to arrange for the necessary paperwork, including the Al Bayan certificate, so that product could be removed from Saudi Arabia” and that he did not do so. More importantly, in his own email to the plaintiff, Mr. Agha acknowledged that he was working on getting that certificate. Mr. Agha’s failure to reply to this evidence gives rise to the adverse inference that he can offer no evidence to contradict it and deprives his defence based on the plaintiff’s alleged failure to arrange for the return of the unused filters of the required air of reality. I conclude that it does not give rise to a genuine issue requiring a trial.

[57] The defendants have failed to meet any parts of the test in Morgan, supra and the motion is therefore dismissed.

Costs

[58] The plaintiff has filed a costs outline setting out partial indemnity costs of $7,752.00 consisting of fees of $5,940.00, HST of $772.20 and disbursements of $1,039.80. Defendants’ counsel in his submissions stated that he took no issue with plaintiff’s counsel’s hours or hourly rate with respect to this motion.

[59] The costs include the costs of the motion to compel Mr. Agha to be examined in aid of execution that came before Master Pope on November 23, 2015. Master Pope’s order adjourns the costs of that motion to the disposition of the motion to set aside the default judgment. Defendants’ counsel submits that 7.2 hours is excessive for that motion because the 50% of the motion that was not adjourned proceeded partly on consent and partly unopposed. The 7.2 hours attributed to all aspects of that motion, which sought five different categories of relief, and which included communications to resolve the motion, preparation of the order and an appearance, do not warrant reduction.

[60] Defendants’ counsel also submitted that any costs associated with the preparation of the Ball affidavit should depend on whether or not the court was prepared to give it any weight. As I concluded that I could rely on it, the costs of preparing it are recoverable.

[61] Accordingly, the moving defendants shall pay the costs of this motion and the motion before Master Pope fixed at $7,752.00, payable forthwith.

MASTER GRAHAM

Date: May 24, 2016