Ontario Superior Court of Justice

Court File No.: CV-24-0010-00
Date: 2025-06-11

Between

Melissa Bates, Plaintiff
and
The Corporation of the Town of Atikokan and Northern Waterworks Inc., Defendants

Appearances:
Peter Howie, for the Plaintiff
David Boghosian, for the Defendant, The Corporation of the Town of Atikokan
Faye Brandson, for the Defendant, Northern Waterworks Inc.

Heard: Thursday, March 6, 2025, Fort Frances, Ontario
Justice: S. J. Wojciechowski

Motion to Set Aside Noting in Default

Decision

[1] The defendant, The Corporation of the Town of Atikokan (“Atikokan”) brings this motion against the plaintiff, Melissa Bates (“the Plaintiff”), seeking to set aside the noting in default signed by the Registrar on November 18, 2024.

[2] For the reasons which follow, I am prepared to grant the relief sought by Atikokan.

Background

[3] The Plaintiff’s home experienced flooding on April 22 and 23, 2022, as well as on July 11, 2022.

[4] A letter was forwarded to Atikokan on March 11, 2024, by counsel for the Plaintiff, which outlined the basis for a claim against Atikokan seeking damages caused by the flooding.

[5] Atikokan’s counsel responded on April 4, 2024, with a letter denying liability for the Plaintiff’s damages, and a Statement of Claim was then issued on April 10, 2024.

[6] Atikokan served a Notice of Intent to Defend upon the Plaintiff on April 12, 2024.

[7] By May 31, 2024, the Plaintiff sent a letter to Atikokan seeking a Statement of Defence. Emails were exchanged between counsel for the parties. Atikokan advised that it would be getting instructions, and the Plaintiff’s counsel responded that he would follow up in a few weeks’ time if nothing had been received by then.

[8] On June 24, 2024, another letter was sent by the Plaintiff to Atikokan requesting a Statement of Defence. In addition, around this same time, counsel for the Plaintiff, Atikokan, and the defendant, Northern Waterworks Inc. (“Northern Waterworks”), exchanged emails discussing possible dates for the examinations for discovery to be held.

[9] On July 18, 2024, the Plaintiff sent another letter to Atikokan requesting that its Statement of Defence be served by July 31, 2024, or Atikokan would be noted in default.

[10] On July 30, 2024, emails again were circulated amongst counsel for the parties. Atikokan advised that a Statement of Defence had been drafted, but not yet finalized. Documentation from the Plaintiff supporting the damages’ claim was requested and agreed to be exchanged. The parties also agreed to conduct a virtual meeting, which would be arranged in the middle of August 2024, in order to discuss the positions of the parties. Discoveries were proposed to occur in early 2025, and the Plaintiff agreed to January 2025 dates for examinations. Finally, the Plaintiff requested that Atikokan’s Statement of Defence be served and filed before the August virtual meeting.

[11] Correspondence exchanged on August 6 and 7, 2024, set the date for the virtual meeting to occur on August 14, 2024. Two days of discoveries were also notionally set for the week of January 20, 2025.

[12] On August 14, 2024, the virtual meeting proceeded, and January 22 and 23, 2025, were confirmed as the dates for the examinations for discoveries of the parties. It was also agreed that Atikokan would not have to provide its Statement of Defence until the Plaintiff’s damages’ documentation was circulated.

[13] On September 3, 2024, the Plaintiff sent a letter to Atikokan asking for its Statement of Defence “in due course”, indicating that Atikokan’s pleading was necessary in order to determine the scope of the parties’ Affidavit of Documents.

[14] On November 2, 2024, and November 9, 2024, emails were sent to Atikokan demanding a Statement of Defence. The second of these emails indicated that if no Statement of Defence was received on or before November 15, 2024, default proceedings would be commenced.

[15] Atikokan did not serve its Statement of Defence on or before November 15, 2024.

[16] The Plaintiff then noted Atikokan in default on November 18, 2024.

[17] On December 20, 2024, Atikokan served its Affidavit of Documents upon the Plaintiff. At this time, the Plaintiff advised that Atikokan had been noted in default, and that a motion for judgment had already been argued in front of Fregeau J. on December 19, 2024.

[18] Notice of the motion for judgment was provided to Northern Waterworks, but not Atikokan.

[19] Justice Fregeau reserved his decision on the motion for judgment. Before his decision was released, the parties arranged for a Case Conference on February 5, 2025. At the Case Conference, Atikokan advised that it intended to bring this motion since efforts at resolving the issues between the parties were unsuccessful. A timetable was then established by Justice Fregeau for the delivery of materials, resulting in the judgment being held in abeyance until the outcome of this motion was determined.

Evidence and Position of Atikokan

[20] The law firm Boghosian + Allen LPP was appointed to defend this matter on behalf of Atikokan following service of the Plaintiff’s Statement of Claim. Dean Paspalofski was noted as the solicitor of record for Atikokan.

[21] The evidence filed by Dean Paspalofski acknowledges correspondence with counsel for the Plaintiff on June 7, 2024, in which he advised that he was in the process of preparing an opinion letter for Atikokan to obtain instructions on next steps. Plaintiff counsel did not insist on a deadline for the delivery of a defence, but stated as follows:

Would it be reasonable for me to follow up in a few weeks if we have not heard back from you? My client is pushing me for a timeline, though I have explained to her that reasonable indulgences are customary and expected.

[22] Counsel agreed, and a deadline for the delivery of Atikokan’s Statement of Defence was not imposed.

[23] Counsel for the Plaintiff wrote to counsel for the defendants on June 24, 2024. In that correspondence, Plaintiff’s counsel stated the following:

Our client is pressing us for updates on this matter and so I am following up to ask if we can expect your Statements of Defence soon, or if there is a possibility of an early resolution. We remain open to early resolution. If you intend to defend the claim, I would appreciate it if you can commit to a timeline for the same.

[24] A number of emails were then exchanged between counsel in the latter part of June 2024. In addition, counsel spoke on the phone to discuss possible dates for discovery, as well as issues related to the Plaintiff’s damages.

[25] On July 18, 2024, Plaintiff’s counsel emailed the defendants to let them know the following:

Our instructions are to note the defendants in default if this matter has not resolved or remains undefended by July 31, 2024. I am available to discuss should that be of assistance.

[26] At the end of July 2024, a number of emails were then exchanged between all counsel. Atikokan advised that a draft Statement of Defence was prepared, and the same was confirmed by counsel for Northern Waterworks. It was also agreed between all parties that a virtual meeting would be scheduled to discuss the further progress of this matter, as well as the Plaintiff’s claim for damages.

[27] On August 6 and 7, 2024, a number of emails were exchanged between counsel, in which they agreed to attend a virtual meeting on August 14, 2024. Dates for discovery were proposed to be held during the week of January 20, 2025, with all counsel agreeing that two days should suffice.

[28] At the virtual meeting of August 14, 2024, it was agreed that the examinations for discovery would proceed on January 22 and 23, 2025. The evidence of Atikokan is that, during that virtual meeting, Plaintiff’s counsel advised that it was not necessary to serve a Statement of Defence until the Plaintiff had prepared and distributed a damages’ brief. Settlement proposals were also exchanged during that virtual meeting, and counsel for Atikokan, Mr. Paspalofski, also advised that he was getting married in October 2024 and would be on his honeymoon into November 2024.

[29] On September 3, 2024, Plaintiff’s counsel provided the defendants with a damages’ brief, including quotes for remediation. In the correspondence attaching the damages’ brief, Plaintiff’s counsel stated as follows:

Unless your clients are in a position to negotiate resolution at this stage, we would appreciate receiving your Statements of Defence in due course so that we have them in hand to determine the scope of productions in discoveries.

[30] The next correspondence from Plaintiff’s counsel was on November 2, 2024, and November 9, 2024. At that time, Mr. Paspalofski was on his honeymoon. In the correspondence from Plaintiff’s counsel, Statements of Defence were demanded to be delivered forthwith.

[31] No further correspondence was exchanged between the parties until December 20, 2024, when counsel for Atikokan served an Affidavit of Documents. At this time, Mr. Paspalofski was advised that Atikokan had been noted in default and that the Plaintiff had proceeded with a motion for default judgment. While counsel for Atikokan requested that the Plaintiff set aside the default notice, following discussions between counsel in late December 2024 and early January 2025, the parties were unable to agree on a go forward process. Accordingly, the Plaintiff refused to set aside the default notice, and Atikokan sought a case management hearing in front of Mr. Justice Fregeau, which ultimately resulted in this motion.

[32] The evidence filed by Atikokan indicates that the reason for not filing its Statement of Defence earlier was due to the complex and technical nature of the action. Atikokan did not want to file a boilerplate defence, and instead was working on a detailed and comprehensive Statement of Defence. Atikokan was also looking at whether it would be necessary or prudent to issue a Third Party Claim, which would be best done immediately after the Statement of Defence was filed, thereby avoiding the need for a motion for leave.

Evidence from Plaintiff

[33] The Notice of Intent to Defend from Atikokan was served on April 12, 2024, and noted Dean Paspalofski of Boghosian + Allen LLP as counsel of record.

[34] On May 31, 2024, counsel for the Plaintiff wrote to Mr. Paspalofski asking about the status of Atikokan’s Statement of Defence, advising that the Plaintiff was pressuring her counsel to move the matter forward.

[35] On June 7, 2024, Mr. Paspalofski advised that he was preparing a legal opinion for his client and would be seeking instructions once that opinion was provided. Counsel for the Plaintiff suggested that, if nothing had been received within a few weeks, he would follow up with Mr. Paspalofski. Counsel for Atikokan agreed, suggesting that they connect again at the end of June 2024.

[36] On June 24, 2024, Mr. Judson – Plaintiff’s counsel – emailed counsel for Atikokan and Northern Waterworks, advising that the Plaintiff was pressing him for updates and asking when the delivery of the parties’ Statements of Defence could be expected.

If you intend to defend the claim, I would appreciate it if you can commit to a timeline for same.

[37] No response was provided to this correspondence by Atikokan nor Northern Waterworks.

[38] On July 17, 2024, Mr. Judson sent another email to counsel for Atikokan and Northern Waterworks. The message this time was clear:

Our instructions are to note the defendants in default if this matter has not resolved or remains undefended by July 31, 2024.

[39] Atikokan did not respond to Mr. Judson’s email until July 30, 2024, which was the day before the Plaintiff indicated Atikokan would be noted in default absent its Statement of Defence. In his response, Mr. Paspalofski stated that a draft defence had been prepared and was being reviewed by his client. In any event, he anticipated being able to serve the Statement of Defence of Atikokan “in the near future”. He then suggested that discoveries be scheduled for January 2025, and requested documentation to support the damages being claimed by the Plaintiff.

[40] Mr. Judson responded to Mr. Paspalofski’s email – which was also sent to counsel for Northern Waterworks – by confirming that discoveries could proceed for two days in January 2025. In addition, in response to Mr. Paspalofski’s suggestion that all counsel get together on a phone call to discuss the progress of the action, the dates of August 13, 14 or 15, 2024, were proposed. Finally, the defendants were advised that the Plaintiff was “agitating to commence default proceedings”, and, since she was eager to move the matter forward, Mr. Judson said he would appreciate defences being served before the phone call in August proceeded.

[41] A Zoom meeting was then set up for August 14, 2024, at which all three counsel attended. During this meeting, Mr. Judson agreed to provide documents to support the Plaintiff’s damages. In addition, Mr. Judson stated that if damages were anticipated to exceed the monetary limits for simplified procedure, he would be amending his client’s Statement of Claim.

[42] Mr. Judson does not recall any discussion at this meeting of Mr. Paspalofski’s pending marriage and the time he would be away from the office for this purpose.

[43] Following this Zoom meeting in August 2024, Mr. Judson did not confirm the discussions with counsel by email or other correspondence to the defendants. Instead, on August 19, 2024, he wrote to his client, the Plaintiff, and reported on a number of issues, including the following:

If your damages are going to exceed $100,000, I will need to know so that I can amend your Statement of Claim. If I have to do that, I can do it without the consent of the other parties before they have file defences. I do not expect they will defend until the first week of September, so I would like to confirm your damages beforehand.

The defendants have asked for documentation supporting your damages. As such, gathering up any further outstanding receipts or quotes would be helpful.

Process Moving Forward

Finally, we discussed the next steps in the process and set a timetable for the matter if it moves forward to trial.

The parties have held January 22 and 23 for examinations for discovery (sometimes called depositions or out of court examinations). As all of us have busy practices we wanted to make sure we had dates lined up in case this matter moves forward.

We have also agreed to exchange affidavits of documents (i.e., the non-privileged, relevant documents related to the issues in the claim) by November 8, 2024. I suspect once I have your damages documents I will have most of the relevant documents. However, if there is anything else that I do not have, please send it over.

[44] On September 3, 2024, Mr. Judson emailed counsel for the defendants and provided documents and information in support of the Plaintiff’s claim for damages. In that same email, Mr. Judson confirmed that it would not be necessary to amend his client’s claim since the damages would not exceed the amount already claimed. Finally, he added the following:

Unless your clients are in a position to negotiate resolution at this stage, we would appreciate receiving your Statements of Defence in due course so that we have them in hand to determine the scope of productions in discoveries.

[45] Not having received any response to his email of early September 2024, late in the evening on Saturday, November 2, 2024, Mr. Judson sent counsel the following email:

Good evening counsel:

According to my calendar affidavits of documents in this matter are to be exchanged by November 8; however, I still do not appear to have any Statements of Defence from your clients.

Unless I have missed a transmission from your offices, please advise me immediately of the status of your Statements of Defence. It has been several months since we spoke and agreed to a timetable with dates for examinations.

[46] Neither counsel for Atikokan nor counsel for Northern Waterworks responded. Accordingly, Mr. Judson followed up with another email on November 9, 2024:

Having received no reply, my instructions are to commence default proceedings against your clients if Statements of Defence are not served on us by Friday, November 15.

[47] Northern Waterworks delivered its Statement of Defence. Atikokan did not. After noting Atikokan in default, the Plaintiff prepared its motion materials in support of obtaining a default judgment, served them upon Northern Waterworks, and argued the motion on December 19, 2024.

Decision

[48] The issues in this motion are governed by Rule 19.03(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, (the “Rules”) which states as follows:

The noting of default may be set aside by the court on such terms as are just.

[49] This is not a motion requesting that a default judgment be set aside. If it were, Rule 19.08 would be in play. It is not. The test for setting aside a noting in default is different than a motion setting aside a default judgment.

[50] A default judgment has more finality attached to it, in light of the fact that evidence has been led by one party which has been accepted by a court to lay the foundation for and support the judgment which has issued. Factual underpinnings of the case have been carefully considered, weighed, and determined, the result of which is a decision delivered by the court on the merits of the damages sought by a plaintiff.

[51] A noting in default, however, is the first administrative step which must be necessarily taken before a default judgment can be considered. At the point where a matter has been noted in default, no decisions by a judge have been made, and only the failure of one party to meet the timelines set out by the Rules has been asserted.

[52] Rule 19.02 outlines a number of consequences which flow from a noting in default, including the fact that defendants noted in default are not entitled to notice of any future steps in the litigation.

[53] Within the context of a motion setting aside an administrative dismissal of an action by the Registrar based upon a plaintiff’s delay, Weiler J.A. in H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173, para 25, noted a tension in two policies that delay cases necessarily must address. These tensions are no different in a Rule 19.03 motion:

The first is that civil actions should be decided on their merits. The second is that civil actions should be resolved in a timely and efficient manner in order to maintain public confidence in the administration of justice.

[54] While many cases rely upon the first principle in overruling the second, there is no doubt that public confidence in the administration of justice in civil actions has worn thin and is the subject of much discussion amongst those who are involved in Ontario’s justice system. This includes litigants, lawyers, the judiciary, and legislators, who all acknowledge the overly costly and time-consuming process that has plagued the civil litigation system for decades. This is so much so that, currently, there is a process underway to completely overhaul Ontario’s litigation system which aims to radically change the manner in which civil disputes are resolved by the courts.

[55] Until that day dawns, Sharpe J.A.’s comments in 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, para 19, cited in H.B. Fuller Company, at para. 26, are notable:

[P]rocedural rules are the servants of justice not its master … We should strive to avoid a purely formalistic and mechanical application of time lines that would penalize parties for technical non-compliance and frustrate the fundamental goal of resolving disputes on their merits. [T]he Rules and procedural orders are construed in a way that advances the interests of justice, and ordinarily permits the parties to get to the real merits of their dispute.

[56] Where a delay is caused by counsel error, then the first principle is applied with additional vigour. In those situations, courts should focus on the rights of the litigants, and not the conduct of their counsel: see Habib v. Mucaj, 2012 ONCA 880, para 7. Innocent clients should not suffer the irrevocable loss of the right to proceed with the litigation because of inadvertence by the lawyers retained to advance those rights: see Marché D’Alimentation Denis Thériault Ltée v. Giant Tiger Stores Limited, 2007 ONCA 695, para 28.

[57] In the case of Intact Insurance Co. v. Kisel, 2015 ONCA 205, para 13, Laskin J.A. noted that the context and factual situation should be considered when exercising discretion to set aside the noting of default. Citing a number of cases, the following were then listed as additional factors to consider:

a. The behaviour of the plaintiff and the defendant;
b. The length of the defendant’s delay;
c. The reasons for the delay; and
d. The complexity and value of the claim.

[58] Some cases also consider prejudice, and the impact of setting aside the noting of default on the party relying upon it. However, in terms of whether a defendant noted in default should demonstrate an arguable defence on the merits – definitely a relevant factor in a Rule 19.08 motion – this should only be required in extreme cases.

[59] What appears to be an overriding consideration is found in the wording of both Rule 19.03 and Rule 19.08, which is the discretion of the judge hearing the motion to consider what is appropriate in the circumstances and make a decision on such terms as are just.

[60] In Franchetti v. Huggins, 2022 ONCA 111, para 9, the panel summarized the factors set out in the jurisprudence addressing when to set aside a noting in default:

1. The parties’ behaviour;
2. The length of the defendant’s delay;
3. The reasons for the delay;
4. The complexity and value of the claim;
5. Whether setting aside the noting of default would prejudice a party relying on it;
6. The balance of prejudice between the parties; and
7. Whether the defendant has an arguable defence on the merits.

[61] The court of appeal continued its explanation in para. 10 of its decision:

These factors are not exhaustive nor are they to be applied as rigid rules. An arguable defence on the merits may justify the court in exercising its discretion to set aside a default judgment, and for that purpose it is sufficient for the defence to have an “air of reality”. However, perhaps because requests to set aside noting in default usually occur early in the litigation process, unlike this case, courts will rarely require a defendant who has been noted in default to show an arguable defence on the merits. In a case such as this one involving a significant delay, the moving party is required to show an arguable case on the merits. [Citations omitted].

[62] In considering the Franchetti factors, the overall context of the current litigation governs my analysis. What is of paramount importance in deciding this motion is the fact that the parties were progressing with the litigation on the basis of counsel discussions, either through correspondence or virtual meetings. These discussions resulted in an agreement between counsel, in August 2024, that examinations for discovery would be scheduled over a two day period on January 22 and 23, 2025. Despite Atikokan’s failure to respond in a timely manner to requests for its Statement of Defence, this matter was proceeding forward and the next stage of the litigation – discoveries – had been put in everyone’s calendar.

[63] This is not a situation where one party is completely ignoring its obligations under the Rules. Arguably Atikokan was not as responsive to the request for a defence as the Plaintiff was entitled to expect it to be. The Plaintiff’s frustration with Atikokan is understandable. However, Atikokan did participate in discussions to move the litigation forward. Positions were discussed, and issues of damages were clarified. Atikokan indicated that it was working on its Statement of Defence, and while no such document was served, it did commit to dates on which it would produce a representative to answer the Plaintiff’s questions and provide evidence and admissions which the Plaintiff could rely upon to advance her position.

[64] Atikokan should have done better. But it cannot be said to have completely ignored the litigation, nor was it attempting to pursue delay tactics in order to increase the costs to the Plaintiff or avoid judgment.

[65] Within this overall context, let me review the Franchetti factors.

Conduct of the Parties

[66] In terms of the behaviour of the parties, I have concerns regarding the conduct of Atikokan.

[67] It is clear that the Plaintiff was seeking a defence from Atikokan, and that Atikokan acknowledged it owed a defence to the Plaintiff. Communications from counsel for the Plaintiff, dated May 31, 2024, June 7, 2024, June 24, 2024, July 18, 2024 and September 3, 2024, all request a commitment to provide Atikokan’s position through its Statement of Defence. Amongst those communications, the Plaintiff also stated several times that, without a defence, Atikokan would be noted in default.

[68] Following a meeting in August 2024, it was agreed that the Plaintiff would provide its position on damages with supporting documentation, and at that time the request for Atikokan’s defence was postponed in order to give the parties an opportunity to consider whether resolution was possible. When the damages’ documentation was provided in early September 2024, counsel for the Plaintiff advised that, failing a willingness to discuss settlement, a Statement of Defence in due course would be appreciated.

[69] In response to the requests for a defence, counsel for Atikokan initially indicated in early June 2024 that a legal opinion was being prepared for the purpose of getting instructions. Then, on July 18, 2024, Atikokan advised that a draft Statement of Defence had been prepared, but due to the unique and technical nature of the issues being raised, more time was required to finalize the defence.

[70] As already noted, further discussions and meetings between counsel in August 2024 resulted in the scheduling of discovery dates in January 2025. But no Statement of Defence was served. Atikokan received correspondence from counsel for the Plaintiff on September 3, 2024, pointing out the obvious link between Atikokan’s defence and the scope of documentary production, highlighting the need for a pleading from Atikokan.

[71] With discovery dates approaching, Atikokan knew that its Statement of Defence would be relevant to the content of the Plaintiff’s Affidavit of Documents. Yet, for some reason, Atikokan failed to deliver a Statement of Defence before it served its own Affidavit of Documents on December 20, 2024.

[72] Part of the explanation for the delayed defence provided by counsel for Atikokan, Mr. Paspalofski, is that he got married in October of 2024 and was on his honeymoon during the early part of November 2024. Mr. Paspalofski’s evidence is that he told counsel for the Plaintiff, Mr. Judson, about his pending nuptials and absence from the office, however Mr. Judson’s evidence is that he does not recall this discussion.

[73] It then appears that, during Mr. Paspalofski’s vacation, counsel for the Plaintiff sent two emails, one at 11:19 p.m. on Saturday, November 2, 2024, and a second at 10:03 p.m. on Saturday, November 9, 2024, advising that, absent delivery of a Statement of Defence by November 15, 2024, Atikokan would be noted in default.

[74] In Mr. Paspalofski’s evidence filed in support of Atikokan’s motion, there is no explanation for why a Statement of Defence was not filed before his wedding, despite a draft being available back in July 2024. There is no explanation as to why Mr. Paspalofski’s email account was not being monitored during his absence, either by himself or someone else within his law firm. There is no evidence to support the operation of an auto reply message providing an “out of office” alert to incoming emails and alternate contacts in Mr. Paspalofski’s absence. And there is no evidence to explain what happened when Mr. Paspalofski returned to the office and reviewed his email inbox, which contained Mr. Judson’s two warning shots, nor his failure to provide any response or follow up until December 20, 2024, when Atikokan’s Affidavit of Documents was served.

[75] Following the cases of Habib and Marché, Atikokan should not be saddled with the outcome caused by the Mr. Paspalofski’s inadvertence and inattention to this matter. Without the litigation timetable agreed upon between counsel including scheduled discovery dates, the outcome of this motion may have been different. But at least the litigation process had a plan in place to move it along.

[76] And this is the challenge with the position of the Plaintiff.

[77] The pleadings filed in a litigation matter always provide the basis for determining what evidence is relevant, and what documents should be included in a party’s affidavit of documents. However, the documents to be produced by the Plaintiff would primarily involve those which were necessary to establish the central legal elements supporting her claim. Without Atikokan’s pleading, there could be some gaps in the Plaintiff’s documents, but nothing so fundamental as to disrupt the entire litigation process. A pleading would definitely be necessary before proceeding to discoveries, in order to understand the parameters of the relevant issues to be explored. And it is possible that novel theories or defences advanced at a late stage in the litigation would mean discoveries would have to be adjourned in order to permit Mr. Judson sufficient time to properly prepare. But it cannot be said that, without a Statement of Defence being served by November 15, 2024, discoveries could not proceed as scheduled more than two months from that date.

[78] It was no doubt frustrating to be ignored, with demands for a defence going unanswered. Yet counsel did have meaningful discussions on how to move the litigation along, and a process had been put in place to examine the positions of each of the parties. Surely an affidavit of documents could have been prepared and a draft served by the Plaintiff without a Statement of Defence in hand. This could be done with the caveat that Atikokan could not complain if some disclosure was missing on account of its failure to provide its defence in a timely manner. Alternatively, discoveries could have proceeded with additional future exam dates to be agreed upon if necessary because all relevant issues were not able to be canvassed during the January 2025 dates. Clearly the Plaintiff required a Statement of Defence before the discoveries went ahead, but presumably the discussions between counsel during the summer of 2024 revealed some of Atikokan’s defence position, which could assist the Plaintiff in preparing for discoveries.

[79] In the further alternative, not hearing back from Mr. Paspalofski following the November 2 and 9, 2024 demands for a pleading, a simple phone call would have been able to sort things out. After all, this mode of communication had moved things along in the past.

Length of Delay

[80] Within the context of the litigation timetable which was agreed upon, including the January 2025 discoveries, the length of the delay in Atikokan serving its Statement of Defence is not significant.

[81] The delay was unwarranted. But, in the grand scheme of things, not a determinative factor in this motion.

Reasons for the Delay

[82] As already noted, the delay was caused by the conduct of Mr. Paspalofski and his inadvertence to the requirement that he deliver a Statement of Defence on behalf of his client in a timely manner.

[83] There is no excuse for this. Pleadings are routinely amended throughout a litigation process. The draft Statement of Defence had been prepared by the end of July 2024, and there is no reason why it could not have been served before December 2024. If it required further tweaking in the future, it could be amended.

[84] Pleadings are legal documents prepared by lawyers in order to frame their client’s position in a litigation matter. Aside from asking a client to review the factual assertions set out in a draft pleading – a relatively easy and quick exercise – the remaining allegations in a pleading which set out the legal framework for a defence are within legal counsel’s purview and do not require significant input from a client. There is therefore no reason why a draft pleading prepared in July 2024 could not have been served within the following months.

[85] Counsel for Atikokan also seems to have been absent from his office for a period of time, without any means to monitor his files, and unable to follow up on the emails received during his vacation. Given today’s technology, absent a reasonable explanation, counsel are expected to be able to address file related issues during their absences from the office.

[86] Having said all that, Atikokan agreed to a process whereby it would answer Mr. Judson’s questions in January 2025. The litigation was progressing. The conduct of Mr. Paspalofski should not be to the detriment of Atikokan’s intention to participate in the litigation.

The Complexity and Value of the Claim

[87] The amount of the claim being advanced is in the amount of $130,000.

[88] The Statement of Claim advances a claim against two separate defendants with respect to two separate and distinct flooding events that occurred in the spring and summer of 2022.

[89] Issues raised in the Plaintiff’s claim involve the operation of the sewer system and pumping stations owned by Atikokan and operated by Northern Waterworks, requiring a resolution of the respective duties and obligations of each defendant to each other, and to the citizens of the town of Atikokan, including the Plaintiff.

[90] These are not simple issues, and are of importance to all the parties to this litigation, making a determination on the merits the preferred manner of proceeding.

Prejudice to the Plaintiff

[91] Permitting this matter to proceed will be prejudicial to the Plaintiff’s position secured by the noting in default. However, without any suggestion that evidence will be lost, or unavailable, should the matter proceed, there is insufficient amount of prejudice created if the matter is allowed to proceed as was originally planned.

Balance of Prejudice between the Parties

[92] This matter could have completed the discovery stage several months ago, and perhaps successfully resolved or mediated by the time this decision is ultimately released.

[93] Not permitting the matter to proceed would deny Atikokan the ability to advance its position in defence of the Plaintiff’s claim, including the assessment of damages.

[94] Permitting the action to proceed merely puts the parties back in the position they were in before Atikokan was noted in default.

Defence on the Merits

[95] Atikokan has provided a draft of its Statement of Defence, in which a number of legal positions responding to the Plaintiff’s claim are advanced.

[96] At this early stage of the proceeding, I do not give this factor the weight it would enjoy had months or years passed without any meaningful participation of Atikokan.

[97] Atikokan has defences available to it, which are set out in its draft pleading. If none of these have any merit on the face of them, as is asserted by the Plaintiff in her Factum, then she has the option of subjecting these to a fulsome argument within a summary judgment motion. At this time, however, the defence should be permitted the opportunity to be tested by a discovery process.

Conclusion

[98] On the basis of the foregoing, Atikokan’s motion is granted, and the noting of default is set aside.

[99] Atikokan shall deliver its Statement of Defence and Crossclaim within ten days of the release of this decision.

Costs

[100] With respect to costs, both parties provided me with their Bill of Costs at the conclusion of their submissions and made some brief arguments as to which costs should be payable by which party.

[101] The Plaintiff seeks her costs thrown away in pursuing the default judgement, which was obtained. In addition, due to the conduct of Atikokan, the Plaintiff also seeks her costs in addressing this motion brought by Atikokan.

[102] Atikokan, on the other hand, maintains it was not appropriate for the Plaintiff to proceed to obtain judgement without first advising Atikokan. If such notice had been provided, then the defence issues would have been sorted out and the Plaintiff would not have incurred any unnecessary costs.

[103] Atikokan also asserts that, once it found out about the default judgement and discussed the status of the litigation with the Plaintiff, the Plaintiff should have consented to set the judgement aside and proceed to discoveries. In that this motion was unnecessary, Atikokan should be entitled to its costs of the same.

[104] During the parties’ submissions on costs, reference was made to offers to settle which were exchanged, and the parties argued that there should be an opportunity to present those offers as part of their submissions following my decision.

[105] In light of my reasons, it may be that the positions of the parties with respect to costs have changed, especially if any offers were exchanged.

[106] Accordingly, if either party is seeking costs, and the issue of costs cannot be agreed upon, then I invite submissions from the parties on the costs that they are seeking. Said submissions shall not be more than five pages in length, plus attachments.

[107] Any party seeking costs shall deliver its submissions in writing on or before Friday, June 27, 2025.

[108] Responding submissions, again limited to five pages, are to be delivered on or before Friday, July 18, 2025.

“Original signed by”
S. J. Wojciechowski

Released: June 11, 2025