Court File and Parties

CITATION: Ginkgo Mortgage Investment Corporation v. Srikantharajah, 2026 ONSC 2805

COURT FILE NO.: CV-25-00751497-0000

DATE: May 13, 2026

SUPERIOR COURT OF JUSTICE - ONTARIO

RE:

GINKGO MORTGAGE INVESTMENT CORPORATION

Plaintiff

AND:

SWARNA SRIKANTHARAJAH; RUBAKANTHAN SRIKANTHAN

Defendants

BEFORE:

Associate Justice P.J. Barnes

COUNSEL:

JORDAN POTASKY, for the Plaintiff/Responding Party

SWARNA SRIKANTHARAJAH; RUBAKANTHAN SRIKANTHAN, self-represented Defendants/Moving Parties

HEARD:

May 12, 2026 (by video conference)

ENDORSEMENT

[1] The unrepresented defendants Rubakanthan Srikanthan and Swarna Srikantharajah bring the within motion seeking to set aside the default judgment obtained against them on or about December 2, 2025 and to stay any enforcement action being advanced by the plaintiff Ginkgo Mortgage Investment Corporation (hereinafter the “plaintiff” or the “plaintiff Ginkgo”). The plaintiff resists the defendants' motion seeking to set aside the default judgment it has obtained.

[2] The underlying litigation is a mortgage enforcement action brought by the plaintiff corporation. In short, the plaintiff advanced a mortgage loan to the defendants in the sum of $840,000 on or about January 10, 2024, which encumbered the municipal premises known as 21 Packard Boulevard in Scarborough, Ontario. The mortgage renewed on September 25, 2024, and matured on September 1, 2025.

[3] Prior to the maturation of the mortgage on August 1, 2025, the defendants defaulted on several months of their payment obligations. A demand was subsequently made by the plaintiff to the defendants on or about August 18, 2025, once the defendants were three months in arrears, seeking full payment of the mortgage ($840,000) plus the three months of arrears and interest, plus administrative fees, and further advising the defendants that the plaintiff did not intend to renew the mortgage. The demand by the plaintiff mandated that the outstanding amounts be paid in full no later than 4:00 pm on August 28, 2025, or else the plaintiff would commence mortgage enforcement proceedings, including (but not limited to) a power of sale proceeding.

[4] The defendants failed to pay out the mortgage demand made by the plaintiff before the August 28, 2025 deadline and the plaintiff issued a Statement of Claim on September 11, 2025. The defendants were served with the Statement of Claim on or about September 15, 2025 by an alternative to personal service. The defendants did not defend the action, and as such, the plaintiff obtained default judgment against the defendants on December 2, 2025, in the sum of $897,862.41, along with an Order for the defendants to deliver possession of the subject property to the plaintiff.

[5] The defendants were served with a Notice Demanding Possession on or about December 3, 2025. It was only at this point that the defendants began to take steps to resist the plaintiff's claim, which included bringing this motion, returnable on May 12, 2026.

[6] The defendants are unrepresented, although based on the affidavit evidence presented to the Court in support of the relief they are seeking, and the submissions made during oral argument, they did have legal counsel previously engaged to assist them with the defence of this action, as well as a parallel action involving a caution that had been placed on the subject property by another lender, after their alleged default on a separate $180,000 loan that had purportedly helped them secure the purchase of 21 Packard in the first place (bearing court file number CV-24-00730027-0000). Based on the evidence in the defendants' affidavit, it appears that they ran into arrears of their lawyer's account around October 2025, and as such, their Statement of Defence for the within action was never served and filed with the Court.

[7] The defendants argue that they always intended to refinance their mortgage on the property within the initial term but that the $180,000 caution placed by the plaintiff in the parallel matter, which they claim was placed illegally, prevented them from being able to secure financing. The defendants subsequently experienced "financial difficulty" and further claim that the real estate market "declined significantly", which hampered their ability to secure refinancing. The defendants have provided no evidence to the Court about the value of 21 Packard at the moment but conceded during oral argument that they are underwater on the mortgage and likely have no equity that would be owing to them if the plaintiff were to exercise its power of sale rights. Nor are they living in the property at the moment, as it is tenanted.

[8] The defendants cite Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, in support of their request to set aside the default judgment obtained by the plaintiff and allow them to file a Statement of Defence.

[9] The test to set aside a default judgment was set out by the Court of Appeal at paragraphs 48 and 49 of the Mountain View Farms Ltd. decision. The five factors a Court is to consider in deciding whether to set aside a default judgment are as follows:

(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;

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

(d) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and

(e) the effect of any order the motion judge may make on the overall integrity of the administration of justice.

[10] These five factors have been considered in many other decisions of this Court, including a very recent decision from Schabas J. in 1000101702 Ontario Inc. v. Bihun et al, 2026 ONSC 1900. Justice Schabas further clarified in paragraph 3 of the 1000101702 Ontario Inc. decision (in respect of the five factors outlined above) that:

(t)hese factors are not to be treated as rigid rules; the court must consider the particular circumstances of each case to decide whether it is just to relieve the defendant from the consequences of his or her default.

For instance, the presence of an arguable defence on the merits may justify the court exercising its discretion to set aside the default judgment, even if the other factors are unsatisfied in whole or in part. In showing a defence on the merits, the defendant need not show that the defence will inevitably succeed. The defendant must show that his or her defence has an air of reality.

[11] The Mountain View Farms Ltd. decision otherwise states at paragraph 47 that a Court, when considering a motion to set aside a default judgment, is to determine whether the interests of justice favour granting the Order.

[12] With respect to factor "a", I am of the view that the unrepresented defendants did move promptly to set aside the default judgment after learning about it, as they were served with a Notice Demanding Possession only one day after the plaintiff obtained default judgment. They proceeded to obtain the earliest possible motion date (despite being unrepresented) after several scheduling attempts had been made with the motion scheduling office.

[13] As for factor "b", the unrepresented defendants' failure to file a Statement of Defence in the first place was admittedly due to their account being in arrears with the lawyer that they hired to deal with both this action, as well as the parallel action involving the $180,000 charge that has allegedly kept them from being able to secure refinancing of the 21 Packard property. While the plaintiff points out that no draft Statement of Defence has been provided by the defendants for this action, it must be remembered that the defendants are unrepresented and cannot be held to the same strict procedural standards that are required when all parties are represented by counsel. Accordingly, in my view, the defendants also have a plausible excuse for why the claim by the corporate plaintiff went to default in the first place.

[14] Where the defendants run into problems, however, is on factor "c". Aside from claiming that they always intended to refinance their home, there has been no allegation made by the defendants (or evidence advanced in the motion record) that the mortgage contract that they entered into with the plaintiff Ginkgo was premised on any unconscionable terms, that there were misrepresentations made by the plaintiff that enticed them to sign their mortgage loan, or that Ginkgo acted in any other inappropriate way at any time during life of the mortgage.

[15] In fact, the contrary appears to be true, as the defendants signed a mortgage renewal several months after the mortgage was initially registered and still have made no allegations of misrepresentation or any wrongdoing on the part of the plaintiff Ginkgo. The defendants further conceded during oral argument that there were no problematic or unconscionable terms imposed on them in the mortgage loan that was advanced by the plaintiff Ginkgo, and that the only reason that they had fallen into payment arrears on the Ginkgo mortgage was due to their own problematic financial situation and inability to refinance.

[16] The defendants conceded during oral submissions that they were in arrears of their mortgage with the plaintiff (and thus in breach of their mortgage contract) and that the only thing preventing them from being able to secure refinancing for the 21 Packard property was the placing of what they called an "illegal" $180,000 caution on the 21 Packard property by the plaintiff lender in the parallel action. They argued that the caution on title that is the subject of the parallel litigation was placed on property improperly and without their knowledge, and that they had never seen or agreed to the promissory note that was being used by the plaintiff in the parallel action as the basis for placing the caution on title to their property. The defendants further submitted that they had been informed by their former lawyer that the original caution on title (which appears to have been placed on title as of May 3, 2024, according to the title search report that was included in their supporting affidavit) had been renewed by the plaintiff in the parallel action on June 17, 2024, and was then withdrawn again on July 17, 2024.

[17] The defendants further claimed during oral submissions that they were told by their former mortgage broker and lawyer as of August 2025 that the cautions on title were preventing them from obtaining refinancing for the property, and conceded that the last time they had followed up with a property search (to check whether any cautions still existed on the property, or whether any certificates of pending litigation had encumbered the property) had been in August 2025. They further conceded that they had done nothing to look for any alternative financing in order to meet the monetary demand of the plaintiff Ginkgo since August 2025. They also allowed that there did not appear to be any Certificate of Pending Litigation that had been placed on title to the 21 Packard property since August 2025 (which would prevent refinancing of the property in and of itself), as they had not received any documentation to this effect from the plaintiff in the parallel action.

[18] In deciding whether the defendants have demonstrated that they have an arguable defence on the merits, they need not show that their defence has a likelihood of succeeding. They must simply show that their defence has an "air of reality" to it. See 1000101702 Ontario Inc. at paragraph 3.

[19] In my view, factor "c" is the most important criteria for a Court to consider when deciding whether to set aside a default judgment, as the Court of Appeal indicated in Mountain View Farms at paragraph 51 that an arguable defence on the merits may justify the Court exercising its discretion to set aside default judgment, even if the other four factors that the Court must consider do not fall in the moving party's favour.

[20] I am further guided on this point by the reasoning of Perell J. at paragraph 23 of Watkins v. Sosnowski, 2012 ONSC 3826, where my learned colleague held that:

In circumstances where the plaintiff has obtained a default judgment, the factor of showing a defence on the merits is particularly important because it may justify the court exercising its discretion to set aside the default judgment, even if the other factors are unsatisfied in whole or in part: Chitel v. Rothbart, supra; Morgan v. Toronto (Municipality) Police Services Board, supra. Conversely, the motion to set aside the judgment may be dismissed, if the defendant cannot show a reasonable defence: Bayview Financial, L.P. v. Spartan Collision Corporation, [2007] O.J. No. 1609 (S.C.J.); Maplecrete Group Ltd. v. Canning Contracting Ltd., [2009] O.J. No. 2456 (Master); Bank of Montreal v. Chu (1994), 17 O.R. (3d) 691 (Gen. Div.); Cherry Central Cooperative Inc. v. D’Angelo (2001), 56 O.R. (3d) 655 (C.A.).

[21] Based on the written record and the submissions made during oral argument, the defendants do not appear to have an arguable defence on the merits, nor one that has an air of reality to it.

[22] The defendants clearly breached the terms of their mortgage contract by defaulting on their mortgage payments to the plaintiff Ginkgo when they ran into personal financial difficulty that had nothing to do with Ginkgo. Despite the fact that the defendants' inability to refinance was allegedly due to the improper caution placed on the title to 21 Packard by the plaintiff in the parallel action (which may no longer exist today), this is not a proper defence, or one that bears an air of reality, in my view, to the mortgage enforcement litigation being advanced by the plaintiff Ginkgo.

[23] The mortgage enforcement action being advanced by the plaintiff Ginkgo is one based on breach of contract, and the defendants have conceded that there were no unconscionable or improper terms imposed on them by Ginkgo when they entered into the mortgage loan for 21 Packard, or that the plaintiff Ginkgo has acted in any inappropriate extra-contractual manner.

[24] There is clearly no privity of contract between the plaintiff Ginkgo and the plaintiff in the parallel action that the defendants are dealing with. The plaintiffs have otherwise failed to attempt to mitigate their position by not making any further attempts to refinance 21 Packard since August 2025 when they were told by the previous counsel and broker that no further financing options were available to them. Nor have they followed up to determine if the caution that is the subject of the parallel action was still registered on title to the property in the lead up to this motion.

[25] Counsel for the plaintiff correctly pointed out during argument that cautions can only stay on title for a maximum of 60 days. The defendants conceded to this point and admitted that they had not conducted another title search last year (when they first became aware of the default judgment), or in the lead-up to the return of this motion hearing, to see if the caution on 21 Packard still existed. They also conceded that they had not bothered to make further refinancing applications, as they were having trouble paying many of their other bills due to only one of them being employed at the moment. This would suggest that their purported inability to refinance the property is not due primarily to the cautions placed on title, but more likely (or just as equally) due to their lack of a consistent family income that they would be required to show in order to qualify for the nearly 7-figure mortgage that would be required to pay out the plaintiff.

[26] Despite the fact that I have found that the defendants do not appear to have an arguable defence, the analysis does not stop here. I must also consider factors "d" and "e", being the potential prejudice to the defendants should their motion be dismissed, and the potential prejudice to the plaintiff should the motion be granted, as well as the effect that any Order I may make will have on the overall integrity of the administration of justice, respectively.

[27] With respect to factor "d", the defendants have conceded that they are not residing in the subject property due to "family and financial circumstances". While they claim that the property remains a "significant financial asset" to them, and that enforcement will cause them "serious and irreparable financial loss", they are not being forced out of the only home that they have if the plaintiff ends up enforcing a power of sale if their motion is denied.

[28] The defendants have also not led any evidence to suggest how much equity they have in the home at present, or what the current value of the property is. Most importantly, they conceded during oral argument that they are very likely underwater on the mortgage, and as such, that there would probably be no equity owing to them by the plaintiff if a power of sale were to proceed. As such, I am unable to ascribe much (if any) weight to the position outlined in their supporting affidavit that the property remains a significant financial asset to them, and that its sale would create significant prejudice to them (over and above the prejudice that anyone poised to lose a residential property due to foreclosure would face).

[29] On the other hand, if the defendants' motion is allowed (in light of them having no arguable defence, in my view), the plaintiff will suffer a material amount of prejudice in having to expend more time and legal fees in attempting to recoup the money owed to it than it would ordinarily need to if a power of sale is exercised in a timely manner. On this point, I agree with the plaintiff's argument that granting the defendants' motion would simply be prolonging the inevitable (given their admitted precarious financial situation), and that to do so could very well result in the plaintiff Ginkgo suffering a greater loss on its investment than it should be required to bear. Accordingly, I am of the view that factor "d" falls in the plaintiff's favour.

[30] As for factor "e", it should be kept in mind that this is not a complicated action. The defendants have unfortunately run into financial difficulty due to cost of living expenses, like many Canadians have since the country began to emerge from COVID-19 pandemic, which resulted in them not being able to meet their mortgage payment obligations. The consequence of failing to make your mortgage payments, in a situation where there is no evidence that inappropriate influence or conduct was made by the lender to entice the defendants into signing the mortgage contract, or where there is no other malfeasance or wrongdoing on the part of the lender that is being alleged by the defendants, would make a mockery of the enforcement mechanism of the mortgage contract in the event of a default on payment.

[31] The defendants willingly entered into their mortgage contract with the plaintiff Ginkgo and failed to live up to its terms. This Court cannot countenance the defendants' efforts to set aside a default judgment that they have conceded that they have contractual liability for and that I have concluded that they have no arguable or realistic defence to. To grant the plaintiff's motion would otherwise consume more scarce Court resources than what is already necessary and would be an affront to the integrity of the civil justice system. As such, in my view, factor "e" also falls in the plaintiff's favour.

[32] Overall, while factors "a" and "b" fall in the defendants' favour, the remaining three Mountain View Farms Ltd. criteria (“c”, “d” and “e”) fall in the plaintiffs' favour (including the most important factor “c” of whether there is an arguable defence), which therefore militates against the setting aside of the default judgment obtained by the plaintiff.

[33] Accordingly, in my view, the interests of justice mandate that the defendants' motion to set aside the default judgment obtained by the plaintiff Ginkgo be dismissed.

[34] At the conclusion of the motion I heard the parties' submissions on costs and asked each party if they were successful on the motion, how much they would be seeking from the opposite party for a cost award. As the plaintiff has been successful in resisting the defendants' motion, it is entitled to its costs.

[35] Counsel for the plaintiff presented a cost outline to the Court and defendants in the partial indemnity sum of $4,288.35 inclusive of disbursements and HST, which I find to be an entirely appropriate quantum of costs to be awarded, when considering the work that counsel for the plaintiff has invested into preparing for and attending on this motion, the prevailing principles outlined in Rule 57.01, and the caselaw that has considered these principles.

[35] As such, the defendants shall pay the plaintiff the sum of $4,288.35 within 30 days of this endorsement.

[36] If the plaintiff requires a formal Order dismissing the defendants' motion, then counsel can send a draft for my signature to my ATC Teanna Charlebois (teanna.charlebois@ontario.ca) at his earliest convenience.

Associate Justice P.J. Barnes

Date: May 13, 2026