Court File and Parties

COURT FILE NO.: CV-12-468081 DATE: 2019-07-08

ONTARIO SUPERIOR COURT OF JUSTICE

CHARANJIT GILL, GURBINDER GILL, 2231772 ONTARIO LIMITED, BALWANT BRAR AND NAVDEEP JOHAL Plaintiffs

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LAKHWINDER S. GILL, PALTU KUMAR SIKDER and SIKDER PROFESSIONAL CORPORATION Defendants

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JAGDEV DHALIWAL and RAVINDER S. CHAHAL Third Parties

BEFORE: Sossin J.

COUNSEL: Robert Wood, for the Third Party Claimant, Lakhwinder S. Gill Ravinder Chahal, for himself

HEARD: June 26, 2019

Endorsement

Overview

[1] Pursuant to an endorsement dated May 13, 2019, the motion by Lakhwinder S. Gill (“Gill”) a defendant in the main action who has made a third party claim against Ravinder S. Chahal (“Chahal”) for default judgment in the amount of $254,222.00 was adjourned. Chahal appeared at the motion to oppose default judgment.

[2] The May 13, 2019 endorsement set out the next steps to be undertaken by Chahal.

[3] Chahal was directed to provide an account of his proposed defence which responds directly to the third party claim, and to pay costs to Gill in the amount of $3,000.00.

[4] Chalal provided a summary of his proposed defence, dated June 5, 2019.

[5] On June 17, 2019, Gill delivered reply submissions, and appropriately treated this matter as a request by Chahal to have the noting in default, dated June 26, 2013, set aside.

[6] The test under Rule 19.03 of the Rules of Civil Procedure for setting aside a noting in default was set out by Laskin J.A. in Intact Insurance Company v. Kisel, 2015 ONCA 205 (“Intact”), at para 13:

When exercising its discretion to set aside a noting of default, a court should assess “the context and factual situation” of the case: Bardmore, at p. 285. It should particularly consider such factors as the behaviour of the plaintiff and the defendant; the length of the defendant’s delay; the reasons for the delay; and the complexity and value of the claim. These factors are not exhaustive. See Nobosoft Corp. v. No Borders Inc., 2007 ONCA 444, 225 O.A.C. 36, at para. 3; Flintoff v. von Anhalt, 2010 ONCA 786, [2010] O.J. No. 4963, at para. 7. Some decisions have also considered whether setting aside the noting of default would prejudice a party relying on it: see e.g. Enbridge Gas Distribution Inc. v. 135 Marlee Holdings Inc., [2005] O.J. No. 4327, at para. 8.

[7] Gill takes the position that Chahal should not be permitted to set aside the noting in default, having never provided an explanation for his failure to respond to the third party claim against him, first issued in April, 2013. Chahal first took steps to oppose Gill’s third party claim when he appeared at the hearing where Gill brought a motion for default judgment.

[8] In this case, Chahal was noted in default on June 26, 2013, and the notice of motion for default judgment was served on Chahal on December 20, 2018. In other words, Gill has waited over five years before moving to obtain default judgment.

[9] In these circumstances, I find little prejudice to Gill in permitting Chahal to file a defence.

[10] Further, Gill argues that Chahal’s materials have not responded to the third party claim, as required in the May 13, 2019 endorsement.

[11] In his material, Chahal states that his defence will be that Jagdev Dhaliwal, who is also subject to the third party claim, and Gill were responsible for the losses incurred, and that Chahal “was the one who suffered the most damages and losses.”

[12] I note that Chahal remains self-represented and therefore some leeway is appropriate. Having reviewed the third party claim, I find that Chahal’s description of his defence does respond, at least in part, to the claim. For example, at paragraph 29 of the third party claim, Chahal is alleged to be “personally responsible” for the disposition of the plaintiff’s purchase funds”, while Chahal’s account of his defence states, “I will prove that Jagdev Dhaliwal deposited the funds into an account that I had no signing authority over.” Chahal is alleged to have breached his fiduciary duties to the plaintiff while Chahal asserts in his account of his defence that he will prove Gill “released the deposit without my authority or request.”

[13] While Chahal does not directly address the claim with respect to his representations and warranties to the plaintiff, the account of his defence was not intended to be exhaustive, nor at this stage is it necessary for Chahal to show that his defence is likely to prevail.

[14] With respect to whether Chahal’s account of his proposed defence is sufficient, as the Court of Appeal observed in Intact, at para 13, “Only in extreme circumstances, however, should the Court require a defendant who has been noted in default to demonstrate an arguable defence on the merits…”

[15] Given Chahal’s demonstrated intent on filing a defence to the third party claim, the low bar with respect to the demonstration of the merits of his defence which must be met to set aside a noting in default, and the absence of significant prejudice to Gill, I find that the noting in default should be set aside.

[16] Chahal will be required to deliver a statement of defence to the third party claim, by August 8, 2019.

Conclusion

[17] Chahal was already ordered to pay $3,000.00 in costs thrown away by the adjournment to Gill in light of Chahal’s lack of communication with Gill, and the lack of preparation by Chahal for the default judgment motion. In light of the outcome of this motion, I find that a further costs award is not necessary.

Sossin J. Released: July 8, 2019