Court File and Parties

COURT FILE NO.: CV-22-684528 MOTION HEARD: 20230829 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: IQFA Logistics Ltd., Plaintiff AND: Mitchel Grant Thompson, Defendant

BEFORE: Associate Justice Jolley COUNSEL: David Lee, counsel for the moving party defendant Nisar Patel, counsel for the responding party plaintiff

HEARD: 29 August 2023

REASONS FOR DECISION

[1] The defendant was served with this statement of claim on 6 August 2022 and was noted in default on 8 September 2022. He retained counsel on 11 October 2022 and served a notice of intent to defend the following day, on 12 October 2022. When defence counsel was told that the defendant had already been noted in default, they sought the plaintiff’s consent to set that aside so that he could file a defence. The plaintiff refused to consent or not oppose a motion, so it could not be dealt with in writing. As a result, this motion was heard before me over the course of an hour.

[2] The plaintiff argues that the rules should be strictly construed against the defendant. It takes the position that he has not explained the delay between August 6 and October 11 or shown any extraordinary circumstances that prevented him from responding within the time set out in the rules. It also notes that the defendant has been aware of this claim since June but evaded service by instructing his real estate lawyer not to accept service and by refusing to provide a personal address for service. He had plenty of time in advance of actually being served to retain counsel to defend the claim he knew was coming.

[3] The evidence before me is that the defendant was seeking counsel to defend the action. He had counsel for the transaction that has given rise to this litigation, but that counsel was not a litigator. When he retained counsel on 11 October 2022, they responded the very next day.

[4] While this was not compliant with the rules, the rules do provide that a party may bring a motion to set aside a noting in default where a defence is not filed in time. Rule 19.03(1) specifically provides that a noting of default may be set aside by the court on such terms as are just.

[5] The appellate court in Franchetti v. Huggins 2022 ONCA 111 affirmed the strong preference for cases to be decided on their merits and articulated the factors for the court to consider on a motion under rule 19.03.

[6] Looking at those factors, I am satisfied that an order setting aside the noting of default and having this dispute determined on its merits is appropriate in these circumstances. Looking at the first factor concerning the parties’ behaviour, while the defendant may not have volunteered to accept service of the claim, he was served and sought counsel. While the plaintiff argues that the defendant’s incalcitrance has caused it harm, this is a matter for trial.

[7] The plaintiff is concerned about delay. The delay in responding to the claim was just over a month from when the defence was otherwise due. In considering the overall litigation delay, had the plaintiff consented or not opposed an order to set aside the noting of default, it would have had the defendant’s statement of defence by November 2022 and could have been well through discoveries by this point. As a result of that refusal, the action has been stalled for almost a year. To ensure the matter moves forward, the defendant has confirmed that, if his motion is granted, he will file a defence within 30 days of the release of this decision.

[8] The plaintiff also complains about the defendant’s delay in bringing this motion. The defendant booked 15 minutes on the first available date for this motion, which was in April 2023, in the hope that the motion would be unopposed once the plaintiff had the chance to consider the motion materials. Instead, the motion remained opposed and was put over to this date as the 15 minutes allotted was insufficient to hear an opposed motion.

[9] In considering the reason for the delay, the plaintiff suggests that the defendant should be required to lead evidence of an extraordinary personal circumstance that prevented him from filing a defence before his motion should succeed. The evidence before me is sufficient to explain the reason for the delay, which was not long in any event. He was looking for litigation counsel.

[10] There is no evidence of the complexity or the value of the claim, apart from the statement of claim itself. The claim relates to an alleged breach of the obligation of the defendant to provide the plaintiff with vacant possession on the date of closing. It is alleged that the defendant left what he describes as chattels and what the plaintiff describes as junk throughout the property. As a result, the plaintiff was delayed in having the property surveyed and ultimately developed. The plaintiff, or some combination of the plaintiff and defendant, has now removed the chattels/junk. The plaintiff’s claim for reimbursement of those costs and its claim for damages can be determined on the merits.

[11] While setting aside the noting of default will prejudice the plaintiff in the sense that it will need to prove its claim, the prejudice to the defendant of not setting it aside will be greater as he will lose the chance to defend himself. Having to prove one’s case on the merits is not considered prejudice for the purposes of this motion.

[12] The defendant did not put forward evidence about what his defence might be but I note in Franchetti, supra at paragraph 9 that the court will rarely require a defendant to show an arguable defence on the merits at this early stage.

[13] The motion to set aside the noting of default is granted.

[14] The parties have uploaded costs outlines. However, they advise that there were offers exchanged so I will not make a costs award at this stage. I encourage the parties to settle the issue of costs. If they are not able to do so by 30 September 2023, they may file submissions no more than two pages in length and only on the issue of the impact of the offer(s) to settle by delivery to my assistant trial coordinator, Ms. Meditskos at Christine.Meditskos@ontario.ca. If materials are not submitted by that date, I will assume costs were resolved.

[15] I already have the parties’ uploaded submissions otherwise. If I am required to determine costs, I will take into account that the plaintiff was encouraged in April 2023 by my colleague, A.J. Brown, to strongly consider consenting as it was highly unlikely it would succeed in opposing this motion.

[16] I note that part of the defendant’s costs sought relate to preparation of materials to defend the plaintiff’s cross motion for release of funds held in trust to cover its clean up costs. That motion has never been properly booked. The plaintiff will advise the defendant within ten days whether it intends to actually bring that motion and, if it intends to proceed, will contact the court in the next two weeks to book a date. If I am advised that the motion is being abandoned, I will consider those costs as part of these submissions. If the motion is proceeding and I am advised that the parties have booked a date for its argument, those costs will be left to the associate judge hearing that motion.

Associate Justice Jolley

Date: 30 August 2023