Court File and Parties
COURT FILE NO.: CV-20-6770096 (Toronto) CV-22-88926 (Ottawa)
DATE: 2022/05/31
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2525648 ONTARIO INC, Plaintiff
AND:
9007059 ONTARIO INC., 9905839 CANADA INC., HUI WA LIN AND JIAN YAO a.k.a KEN YAO, Defendants
BEFORE: Regional Senior Justice Calum MacLeod
COUNSEL: Julian Binavince, for the Plaintiff Daniel Tram, for the numbered company defendants (Moving Parties) Haiyan Zhang, for the individually named defendants, Lin & Yao
HEARD: May 31, 2022 – by videoconference
DECISION AND REASONS
[1] This is a Toronto action brought to enforce a franchise agreement and for damages for breach of contract. The plaintiff is the Toronto-based franchisor, and the defendants are two Ottawa-based franchisees and their owners. The plaintiff claims that the franchisees are operating their businesses under new names in breach of the franchise agreements and have not been paying royalties and other fees owed to the plaintiff.
[2] The motion before the court is a motion by the defendants to transfer the Toronto action to Ottawa. Pursuant to paragraphs 48 – 51 of the Consolidated Provincial Practice Direction, this motion was originally brought to me in Ottawa, in writing, in my capacity as Regional Senior Judge. It was adjourned to an oral hearing because it is opposed by the plaintiff and because there is a fundamental problem with the transfer request.
[3] The problem is that the defendants have already been noted in default in Toronto. The action was commenced on February 17th, 2022. Service of the statement of claim was effected on March 1st and 2nd, 2022. Although it appears a Notice of Intent to Defend was filed on March 22, 2022, all parties were noted in default on April 14, 2022, because they had not filed defences. As of this date, no motion has been brought to set aside the noting of default and there is no agreement to do so. Accordingly, the transfer motion is premature.
[4] As a first step, Pursuant to Rule 19.03, the defendants must either bring a motion to set aside the noting of default or they must obtain the consent of the defendant to file defences. Counsel for the defendant advises that he has requested a draft statement of defence, but none has been forthcoming. In fairness, it should be noted that Ms. Zhang was only just retained but Mr. Binavince has been communicating with Mr. Tram.
[5] Pursuant to Rule 37.03, the motion to set aside noting of default and to permit a defence to be filed ought to be brought in Toronto. Although it is technically possible to seek leave in the Notice of Motion to have it heard in Ottawa, there is no real benefit to doing so. As all motions are being heard virtually at the moment and all motion material is to be filed electronically, it is just as easy to have the motion heard by a Judge or Associate Judge in Toronto as it is in Ottawa.
[6] Mr. Binavince indicates that his client may be prepared to settle the entire action if the defendants make a reasonable proposal. I note as well that both in Toronto and Ottawa, if the action is revived, Rule 24.1 will apply, and the parties will be required to mediate the dispute before it goes to trial. It may well be prudent for the parties to carefully consider the costs involved in bringing these motions and in prosecuting and defending the action and to consider whether an immediate and early resolution is a more business effective result than lengthy litigation. They could also agree to set aside the default, extend the time for filing defences and go immediately to mediation if that is appropriate. I leave that to the parties and their counsel to discuss.
[7] In any event, the transfer motion is premature since the action is currently undefended and the plaintiff and its counsel are Toronto based. The transfer motion is adjourned to no fixed date (sine die) and may be renewed if and when the action becomes a defended action. If the parties agree to filing defences and also agree to transfer the action to Ottawa, then they have my approval for the transfer and they may simply file a consent order. The court will deal with the costs of this motion, if necessary, when it returns before the court.
Date: May 31, 2022
C. MacLeod, RSJ
Date: May 31, 2022
COURT FILE NO.: CV-20-6770096 (Toronto) CV-22-88926 (Ottawa)
DATE: 2022/05/31
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: 2525648 ONTARIO INC, Plaintiff
AND:
9007059 ONTARIO INC., 9905839 CANADA INC., HUI WA LIN AND JIAN YAO a.k.a KEN YAO, Defendants
BEFORE: Regional Senior Justice Calum MacLeod
COUNSEL: Julian Binavince, for the Plaintiff Daniel Tram, for the numbered company defendants (Moving Parties) Haiyan Zhang, for the individually named defendants, Lin & Yao
DECISION AND REASONS
Regional Senior Justice C. MacLeod
Released: May 31, 2022