Cherokee Financial Inc. et al. v. Lan, 2026 ONSC 1538

CITATION: Cherokee Financial Inc. et al. v. Lan, 2026 ONSC 1538

COURT FILE NO.: CV-25-89105

DATE: 2026-03-26

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CHEROKEE FINANCIAL INC. and GABRIELA VILLEGAS

Plaintiff/Respondent

– and –

YUAN LAN

Defendant/Moving Party

Aaron H. Boghossian, for the Plaintiff/Respondent

Fatma Uyuklu, for the Defendant/Moving party

HEARD: December 5, 2025

Justice s. antoniani

1The within action relates to an alleged collateral mortgage which was registered against properties titled to the defendant, Yuan Lan, and which are located at 831 Beach Boulevard, Hamilton, Ontario, and 2680 Council Ring Road, Mississauga, Ontario. The mortgage is in favour of the Plaintiffs.

2Ms. Lan does not own or have any interest a third property which was subject to related mortgages, and which is located at 632 Beach Boulevard, in Hamilton, Ontario. That property is owned by Michael Ralph Emiglio. Ms. Lan indicates that she was in a relationship with Michael Emiglio and that he took advantage of their friendship and her limitations to perpetrate a fraud on her, which resulted in mortgages being placed on the properties without her knowledge or consent. Ms. Lan provided evidence that she holds title to the property at 2680 Council Ring Road as a trustee for her former spouse, who resides at that address.

3Ms. Lan brings a motion seeking the following relief:

(a) An Order to set aside the noting in default and the Default Judgment;

(b) An Order extending time to serve and file a Statement of Defence;

(c) An Order staying all enforcement proceedings, including the writ of

possession pending a determination of this action on its merits;

(d) An Order restoring possession of the property municipally known as 831 Beach Boulevard, Hamilton, Ontario to the Defendant;

(e) An Order directing the Plaintiffs to provide a full accounting and forthwith return all rent collected from the 831 Beach Boulevard property from November 2024 to the date of the Order; and

(f) Costs on a substantial indemnity basis.

Decision

Decision

4The default judgment is set aside.

5The defendant shall have 21 days from the date of the release of these reasons to file her statement of defence.

6The plaintiffs are to provide the defendant, within 21 days of receipt of these reasons, a full accounting of all rent collected from her property from November 2024 to current date (or the date that the tenants vacated the property).

Discussion

Discussion

7The defendant makes 2 arguments for the setting aside of the default judgment: first, that she is entitled to have the default judgment set aside pursuant to Rule 19.08 of the Rules of Civil Procedure as a right, because attempted service on her was not compliant with the Rules;

8She also argues that the default judgment should be set aside pursuant to Rule 19.08 because she meets the criteria set out in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194.

Setting aside default judgment – Rule 19.08

Rule 19.08

Setting aside default judgment – Rule 19.08

9Rule 19.08 states that 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. R.R.O. 1990, Reg. 194, r. 19.08

10In Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194 the court outlined the following factors for the court’s consideration on a motion to set aside a default judgement:

(a) whether the motion was brought promptly after the defendant learned of the default judgment;

(b) whether there is a plausible excuse or explanation for the defendant's

default in complying with the Rules; and

(c) whether the facts establish that the defendant has an arguable defence on the merits.

11The court’s ultimate task on a motion to set aside a default judgement is to determine whether the interests of justice favour granting the order: Mountain View Farms.

Was Service of the statement of claim compliant with Rule 16.03(5)?

Was Service of the statement of claim compliant with Rule 16.03(5)?

12Rule 16.03(5) provides as follows:

Service at Place of Residence

(5) Where an attempt is made to effect personal service at a person’s place of residence and for any reason personal service cannot be effected, the document

may be served by,

(a) leaving a copy, in a sealed envelope addressed to the person, at the place of residence with anyone who appears to be an adult member of the same household; and

(b) on the same day or the following day mailing another copy of the document to the person at the place of residence, and service in this manner is effective on the fifth day after the document is mailed. R.R.O. 1990, Reg. 194, r. 16.03 (5)[emphasis added]

13The plaintiffs’ Affidavit of Service confirms that the Statement of Claim was left with a female individual named Pouling Chen at 2680 Council Ring Road, Mississauga, Ontario on the same day an unsuccessful attempt was made to personally serve Ms. Lan. The plaintiffs evidence is that Pouling Chen is an adult in the same household at Ms. Lan, and therefore service complied with Rule 16.03(5).

14Recognizing that the defendant’s sworn evidence is that she has not lived at 2680 Council Ring Road since 2023, the plaintiffs urged the court to draw an adverse inference upon an examination of the evidence in support of attempts of the plaintiffs to confirm occupancy of Council Ring Road. They suggest that the court is able to find that, in fact, Yuan Lan did reside there at the time of service in February 2025.

15The plaintiff’s affidavit of service, sworn by their previous counsel Mr. Tucci, indicates that he hired an agency to confirm occupancy of the Council Ring property. The affidavit, which relies on an email report of the occupancy check - indicates that an adult female person named Yuan answered the door of 2680 Council Ring Road. The plaintiff contends that this was the defendant, Yuan Lan. Thereafter, the female went brought an adult male named Pulin Chen to the door, and he confirmed that he resided at 2680 Council Ring Road with Ms. Lan, and that no other adults reside there.

16By contrast, Ms. Lan’s sworn evidence is that she has not resided at the Council Ring Property since January 2023. Her evidence is that her estranged husband and her mother-in-law have resided there since she and her husband separated. In support of her sworn evidence on this issue, Ms. Lan provided a copy of a separation agreement dated January 25, 2023, between herself and her now estranged husband. That agreement indicates that the Council Ring property belongs to her husband as of its January 2023 signing date.

17Further, Ms. Lan produced evidence of a lease agreement at 2316 New Street in Burlington, Ontario, and she has provided a copy of that agreement, in addition to copies of rent cheques and utility invoices addressed to her at 2316 New Street.

18In further support of her argument that there is ambiguity around who was served at the Council Ring address, Ms. Lan points to a discrepancy with the description of the individual referred to in the occupancy report as having come the door after it was answered by a person who identified themselves as Yuan. The second individual is described as a male who provided the name Pulin Chen. Mr. Pulin Chen is said to have identified the woman who first answered as Yuan Lan, the defendant. Ms. Lan’s evidence is that the information is necessarily incorrect. Pouling Chen is the name of Ms. Lan’s mother in law, and Ms. Lan’s evidence is that the mother in law does in fact reside at the Council Ring address.

19Ms. Lan maintains that she did not reside at the Council Ring address in February 2025, and that service was not compliant with the Rules, because the claim was not left with a person in her household. Ms. Lan argues that if the service is not compliant, she is entitled to have the default judgment set aside as a matter of right: Royal Trust Corp. of Canada v. Dunn, 1991 7227, wherein Justice Borins noted:

The cases are numerous that where the setting aside of a default is a matter of right and not dependent on the exercise of discretion, there is no need for a defendant to provide evidence to establish a defence because it was through no default of the defendant that he or she was deprived of the right to defend. No better example of such a situation can be found than in a case like this in which the defendant had no notice of the action because he did not receive the statement of claim. This principle is stated in W.B. Williston and R.J. Rolls, The Law of Civil Procedure (Toronto: Butterworths, 1970), at p. 515:

Where a judgment has been obtained irregularly the defendant is entitled to have it set aside ex debito justitiae, in which case he does not have to show a defence on the merits or explain any delay, and terms should not be imposed.

20Ms. Lan also argues that it is also unclear whether the attempted alternative service of a statement of claim to the Council Ring Road address was attempted service of the claim before me, or whether it was attempted service of the prior claim which has been discontinued. As referenced earlier, the plaintiffs brought a prior claim against Yuan Lan, with Court File No. CV-24-00087899-0000. That Claim has since been discontinued.

21In their responding record on the within motion, when addressing the issue of service of the Statement of Claim, the plaintiffs provide the affidavit of Roger DiStefano. That affidavit attaches an unissued copy of the discontinued claim CV-24-00087899-0000, and no copy of the within claim.

22The evidence in relation to attempted service of a Statement of Claim concerning, and, without further evidence and process, I have two directly conflicting pieces of evidence: the affidavit evidence of Ms. Lan that she did not received the Statement of Claim and that she has not resided at the Council Ring property since 2023, against the conflicting evidence of the plaintiffs as to who was actually present at Council Ring Road, and the potential confusion as to which Statement of Claim was served on them.

23The conflicting evidence cannot be reconciled. On a balance of probabilities, I find that service of the Statement of Claim was not in compliance with Rule 16.03(5), and Ms. Lan is entitled to have the default judgment set aside under Rule 19.08 without demonstrating anything else.

24Further, Ms. Lan argues that she meets all three factors from Mountain View Farms and is entitled to have the judgment set aside on that basis as well. Ms. Lan’s evidence is that she tried to inform herself as to what was occurring with the property at 831 Beach boulevard when she first realized that there was a problem, in November of 2024, before issuance of the within claim.

25Ms. Lan indicates that, on about November 1, 2024, her tenants stopped paying rent, so she attended 831 Beach Boulevard to make inquiry. She learned from a neighbour that the property was being foreclosed on and also learned that the plaintiffs were collecting rent from her tenants. Ms. Lan attended at the office of now former counsel for the plaintiffs in November 2024, seeking information and explanation. Counsel Mr. Tucci provided her with 2 statements of claim. Neither of those is the claim before this court, which had not yet been issued. Ms. Lan was a named party in one of the claims CV-24-0087899, referenced earlier in these reasons, which claim has been discontinued.

26The within claim was issued on February 24, 2025.

27The Plaintiffs obtained the Default Judgement on April 3, 2025.

28Ms. Lan’s evidence is that she did not become aware of the default judgment until she found Notice of Vacant Possession posted on the 831 Beach Property, dated June 23, 2025.

29Ms. Lan argues that she acted promptly after discovering the default judgement in June 2025, upon being informed of the situation when she found a Notice to Vacate posted on the property.

30Upon becoming aware of the Default Judgment, Ms. Lan retained Cambridge LLP. Her counsel then contacted plaintiff’s then counsel Mr. Tucci on July 11, 2025, to inform him of their retention and requested all the pleadings and relevant materials with respect to the proceeding. Mr. Tucci responded in writing, refusing to offer any assistance or provide the statement of claim or other documents, and using the same regrettable tone that is seen in his later communication, and is described by Ms. Lan in her affidavit. Mr. Tucci advised counsel for Ms. Lan that he would not respond to any further communications.

31Ms. Lan’s counsel obtained the statement of claim and other documents from the court and later served the within motion on the plaintiffs on August 11, 2025, some 6 weeks after Ms. Lan states that she first became aware of the judgment. In the interim, the plaintiffs retained current counsel and the lawyers communicated about the setting of the current motion, beginning in mid July 2025.

32Ms. Lan’s position is that she never consented to a mortgage, and that Mr. Emiglio perpetrated a fraud against her. While there appears to be evidence which contradicts her position, I am not at this stage making findings of fact, other than to perform an overview to determine whether there is an arguable defence on the merits.

33Some of the Plaintiff’s evidence appears to be strong. Counsel for the plaintiffs directs me to evidence that the defendant knew or ought to have known that there was a mortgage on her property, and that the mortgage was in default. The plaintiffs draw my attention to a document which appears to have been sent to Ms. Lan’s email address and DocuSigned by her, which clearly admits knowledge of and consent to the mortgage. There is also evidence from Ms. Lan herself that she made two payments to the plaintiffs at the request of the plaintiff’s former counsel Mr. Tucci.

34I balance these arguments against the arguments in Ms. Lan’s proposed defence. She argues that she was communicating with both Mr. Emiglio’s counsel and Mr. Tucci using a translation device, and although she understood there was a problem with her property, she did not understand the extend of it. She did not have her own counsel.

35Importantly, Ms. Lan’s sworn evidence is that she does not speak or write in English. She relies on interpretation from others or on the use of translation devices to communicate in English. She indicates that she suffers from severe vision impairment due to complications from eye surgery, and that she has difficulty reading emails and documents. She maintains that she did not knowingly provide consent to having a mortgage on her property. She maintains that she had no knowledge of the default judgment before June 2025.

36It appears that counsel preparing the mortgages for Mr. Emiglio may not have taken sufficient steps to communicate directly or to receive instructions directly from Ms. Lan. It also appears that Ms. Lan may never have attended at the office of counsel in person, or otherwise met counsel who prepared the mortgage documents. There is nothing to confirm whether counsel who prepared the mortgage on Ms. Lan’s properties knew of her language difficulties, or of her vision impairment.

37It is clear that Ms. Lan did not receive legal advice that was independent from Mr. Emiglio. There is nothing demonstrating that the lawyer sent an account to Ms. Lan for registration of the mortgage, or other account for his services. Counsel has since advised that they do not have a retainer agreement with Ms. Lan but produced a client intake form in her name. Ms. Lan’s evidence is that the client intake form produced is inaccurate, and that the signature on it is not hers.

38It appears that Mr. Emiglio received all of the funds advanced on the mortgages, and that Ms. Lan’s interests would have benefitted from independent legal advice.

39At least one set of DocuSign documents counsel prepared were sent to Mr. Emiglio’s email address, but were intended for Ms. Lan’s signature. I take into account all of this evidence, in addition to the fact that Ms. Lan did not receive any funds or other benefit from the Mortgages, which would otherwise have be strong evidence of her knowledge and consent.

40I am not confident that there is no substance to any of her defences. I take into account that if the Default Judgement is set aside, any prejudice to the plaintiffs is compensable through interest and costs, as it would have been had she responded with a statement of defence earlier.

41The notice of motion requests an extension of time for the defendant to file a statement of defence only. On this basis, the plaintiff argues that I should bar Ms. Lan from filing a counterclaim. The impact of setting aside the default judgment is to restore the parties to a previous point in the proceedings. Once restored to that point, the defendant enjoys all the same rights as she would have had, had there been no default. I make no order as to what the defendant’s response to the claim will be, whether a statement of defence, a counterclaim, or a third party claim.

Conclusions

Conclusions

42On a balance of probabilities, I am unable to conclude that Ms. Lan was a member of the household at 2680 Council Ring Road in 2025. In the result, the alternative to personal service was not compliant with Rule 16. On this basis alone, Ms. Lan is entitled to have the default judgment set aside.

43Further, in the alternative, I find that Ms. Lan meets the test as articulated in Mountain View Farms. On her evidence, she did not become aware of the default judgment until late June 2025. She retained counsel and acted reasonably promptly thereafter. Her explanation for the default is plausible, and she has an arguable defence on the merits of the action. I find that it is just in her specific circumstances to set aside the default judgment.

44The default judgment is set aside, and Ms. Lan shall file and serve her response to the Statement of Claim withing 21 days of the distribution of these reasons.

45The plaintiff shall provide the defendant, by email to her counsel, within 21 days of receipt of these reasons, an accounting of rents collected from her tenants from November 2024 to current date (or the date upon which the tenants vacated her property). The amount collected shall be subject to further court order, pending the outcome of the action.

Costs

Costs

46I would urge the parties to agree on costs. I have briefly reviewed the bills of costs uploaded, and note that the moving party’s bill of costs is much higher than the respondent’s – likely because it is not restricted to this motion. The account clearly includes counsel having to understand the issues and the history between the parties, and to prepare a draft statement of defence. I do not intend to consider an award costs other than those directly related to this motion.

47If the parties are unable to come to an agreement, then costs submissions may be made as follows:

a. Within 15 calendar days of the distribution of these reasons to counsel, the moving party shall serve and file her bill of costs, along with any written costs submissions, not exceeding three pages, double-spaced;

b. Within 25 calendar days of the distribution of these reasons, the respondent shall serve and file any responding costs submissions of no more than three pages, double-spaced, together with a draft bill of costs;

c. The moving party’s reply submissions, if any, are to be served and filed within 30 calendar days of the distribution of these reasons, and are not to exceed two pages;

d. If no submissions are received from either party within the timeline allocated, that party shall be deemed to have no submissions; and

e. If no submissions are received from either party, the parties will be deemed to have resolved the issue of the costs, and costs will not be determined by me.