Court File and Parties
MOTION HEARD: 20260212
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: National Bank of Canada, Plaintiff
AND:
Paul Buhay aka Paul John Buhay and Thomas Perreault, Defendants
BEFORE: Associate Justice B. McAfee
COUNSEL: R. Watt and D. Shields, Counsel, for the Defendant Paul Buhay aka Paul John Buhay
A. Etkin, Counsel, for the Plaintiff
HEARD: February 12, 2026
REASONS FOR DECISION
1As set out in the notice of motion, the relief sought by the defendant Paul Buhay aka Paul John Buhay (Buhay) is an order setting aside the order of the Registrar dismissing the action for delay dated October 16, 2024, an order setting aside noting in default of Buhay, an order setting aside default judgment as against Buhay dated March 10, 2017, an order extending the time for Buhay to deliver a statement of defence and crossclaim, an order that monies paid to the plaintiff National Bank of Canada (National Bank) to discharge the writ of execution be returned to Buhay, in the alternative that the monies paid to National Bank to discharge the writ be paid into court, and an order extending the time to issue and deliver a third party claim against the proposed third party Queen Auto Group Inc. (Queen Auto).
2This motion was originally before me on October 2, 2025. The motion was adjourned to December 12, 2025, because the co-defendant Thomas Perreault (Perreault) had not been given notice of the motion and would be affected by the orders sought (see endorsement dated October 2, 2025). In advance of December 12, 2025, on consent of Buhay and National Bank, counsel requested a further adjournment, and the motion was adjourned to February 12, 2026.
3At the return of the motion on February 12, 2026, and having regard to the evidence set out in the supplementary affidavit of Perreault’s sister, Nancy Trottier, sworn January 27, 2026, Buhay’s counsel confirmed that relief was no longer being pursued against Perreault. Counsel for National Bank also confirmed that they would not be pursuing any relief against Perreault in this action. No further adjournment was sought, and the motion proceeded.
4On February 12, 2026, on the motion, the relief being pursued was accordingly confirmed as an order setting aside the order of the Registrar dismissing the action for delay dated October 16, 2024, as against Buhay only, an order setting aside noting in default of Buhay, an order setting aside default judgment as against Buhay dated March 10, 2017, an order extending the time for Buhay to deliver a statement of defence (not a crossclaim), an order that monies paid to National Bank to discharge the writ be returned to Buhay, in the alternative that the monies paid to National Bank to discharge the writ be paid into court, and an order extending the time to issue and deliver a third party claim against Queen Auto.
5National Bank opposes the motion.
6On February 12, 2026, at the conclusion of argument, I advised counsel that I would be reserving my decision.
7On March 11, 2026, while the decision was under reserve, counsel for National Bank wrote to the court to advise that he had just learned that Perreault passed away on March 7, 2026.
8Dates for a case conference were then offered to counsel to address the passing of Perreault. A case conference proceeded before me on March 17, 2026. On the motion, National Bank took the position that there was prejudice because Perreault could not testify based on his limited cognition and extremely poor health as set out in the affidavits of Trottier. On the case conference, National Bank submitted that if the court was of the view that there was any possibility that Perreault may be available to give evidence, there is no longer such a possibility. Buhay submitted that Perreault’s passing does not change anything because on the motion it was clear that Perreault was unable to provide evidence.
9On the case conference National Bank also requested an opportunity to deliver an affidavit dealing with information obtained from Queen Auto relating to the issue of prejudice. I declined to provide such an opportunity. At the return of the motion on February 12, 2026, National Bank attempted to make submissions regarding communications with Queen Auto relating to the issue of prejudice. There being no evidence in that regard, National Bank was not permitted to make those submissions on the motion. The evidence that National Bank now sought an opportunity to provide would have been available for the hearing of the motion.
10In determining this motion, there is no issue that Perreault, a key witness who would have had relevant evidence to provide, was unable to provide evidence as a result of limited cognition and poor health following a serious fall in July 2022, and has subsequently passed away.
11This action arises from the breach of a conditional sales contract dated December 5, 2014. The conditional sales contract was for the purchase of a used 2012 Ford F350 (the motor vehicle). The conditional sales contract provides that it is between Queen Auto and co-buyers, Buhay and Perreault. As part of the conditional sales contract, National Bank agreed to loan $49,223.45 to Buhay and Perreault, payable directly to Queen Auto Group Inc., with an interest rate of prime plus 2.99%.
12On November 20, 2015, default under the loan occurred.
13On or about January 21, 2016, National Bank sent a demand letter addressed to Buhay at the following three addresses: 429 Esker Road, Connaught, ON; 191 Hemlock Street Timmins, ON; and 37 Marion Ave. S., Hamilton, ON.
14The 429 Esker address was Buhay’s address included on the conditional sales contract. The 191 Hemlock address was Buhay’s address listed in an Equifax report. The 27 Marion address was Buhay’s address for service included in a transfer of a property to Buhay and others dated December 23, 1994, with a legal description of Parcel 12912 Southeast Cochrane. All three letters sent by registered mail to Buhay were returned unclaimed.
15On March 1, 2016, National Bank issued the statement of claim under the simplified procedure against Buhay and Perreault seeking damages for amounts owing under the conditional sales contract of $44,613.13, plus interest, an order for possession of the motor vehicle and costs.
16In March 2016, National Bank instructed a process server to attend at the 429 Esker and 191 Hemlock addresses, for the purposes of serving Buhay and Perreault with the claim. The process server was unable to effect service. According to the affidavit of attempted service, no one was at the residence at 429 Esker and a neighbour advised that she never heard of Buhay or Perreault. At the 191 Hemlock address, the current owner advised that he did not know Buhay or Perreault.
17In June 2016, National Bank instructed a process server to attend at the 37 Marion address for the purpose of serving Buhay. The process server was unable to effect service. Two residents advised that it was a rental property, that they have lived there for the past 2 and 3 years, that Buhay did not reside there nor have they received mail addressed to Buhay.
18In an effort to locate another address for Buhay, an assistant in the office of National Bank’s counsel subsequently telephoned the tax assessment department of Cochrane and was advised of a municipal address for Parcel 12912 Southeast Cochrane being 415 Esker Road, Connaught.
19National Bank then brought a motion, without notice and in writing, to extend the time for service of the statement of claim on Buhay and for substitute service of the statement of claim on Buhay. On December 9, 2016, an order was granted extending the time for service to January 31, 2017, and for substitute service by serving Buhay by regular mail to the 191 Hemlock, 37 Marion and 415 Esker addresses.
20On January 5, 2017, National Bank mailed the statement of claim and the order to the three addresses set out in the order.
21On March 10, 2017, the Registrar signed default judgment against Buhay in the amount of $47,993.14, together with costs in the amount of $1,091.00 plus interest.
22On March 27, 2017, National Bank obtained a writ of seizure and sale against Buhay in the district of Cochrane.
23There is no evidence that the default judgment was ever served on Buhay.
24There is no evidence that Perreault was ever served with the statement of claim, or that the action was pursued against Perreault.
25It is Buhay’s evidence that in June 2023, he discovered the writ when he was attempting to sell his cottage property located at 429 Esker. It is Buhay’s evidence that this was the first time he learned about the within action and the first time he learned about the default judgment. It is Buhay’s evidence that he discovered this information approximately two days before closing and was advised by his real estate lawyer that he was required to pay off the writ in order to close the sale of his cottage and liability could be resolved at a later time.
26In or about the end of June 2023, the office of Buhay’s real estate lawyer requested a payout statement from counsel for National Bank. In an email dated June 27, 2023, the assistant in the office of Buhay’s real estate lawyer advised National Bank’s lawyer: I spoke to our client and he is stating that the purchase of the 2012 truck was fraudulent. He told me that his signature was forged and it was dealt with [sic] the police. I did ask if he had a report that he can give us. Can you still send me the payout statement and I will discuss this with the lawyer on the file?
27A payout statement was provided on June 28, 2023, for the total amount of $71,012.01 as of June 30, 2023. Buhay paid the amount, and the writ was discharged. At that time, there was no indication that the amount was being paid under protest or that a motion would be brought to set aside the default judgment or that a request would be made for the monies paid to discharge the writ to be returned to Buhay.
28There is no evidence of any further contact by or on behalf of Buhay with National Bank until approximately 15 months later when on October 4, 2024, Buhay’s counsel wrote to National Bank’s counsel stating that Buhay’s counsel was “…preparing to make a motion to set aside the judgment and have the money returned”.
29On or about January 29, 2025, when attempting to file the original notice of motion, Buhay learned that the action had been dismissed for delay by the Registrar. The motion material Buhay submitted for filing was accordingly rejected. On January 31, 2025, Buhay learned that the Registrar dismissed the action for delay on October 16, 2024. Prior to January 31, 2025, Buhay had not received a copy of the dismissal order. The dismissal order noted Buhay’s address as 191 Hemlock.
30The within notice of motion, now also seeking to set aside the Registrar’s order dismissing the action for delay, was served on National Bank by email on or about February 6, 2025.
31According to Buhay’s evidence, at the time that the conditional sales contract was purportedly signed, Buhay was living at 429 Esker. According to Buhay’s evidence, this was the cottage property that Buhay was in the process of selling when he learned of the writ, the action and the default judgment. Buhay’s evidence is that he never lived at 415 Esker or 191 Hemlock and has not lived at 37 Marion since it was sold in 2005.
32Buhay’s evidence is that he has no knowledge of the conditional sales contract, has never met with Queen Auto, never had the benefit of the contract, never purchased or saw the motor vehicle and never made any payments. Buhay’s evidence is that the signature on the contract is not his signature. Buhay does acknowledge knowing Perreault, who worked with Buhay at a mine in Detour Lake, where Buhay was a site supervisor for a contracting company. Buhay’s belief is that Perreault used Buhay’s personal information and signature to obtain the loan to purchase the motor vehicle. Other than the reference to the police in the assistant’s email, there is no police report or other information in regard to police involvement before me.
33Buhay argues that default judgment ought to be set aside as of right because the judgment was irregularly obtained. In the alternative, Buhay argues that if default judgment was regularly obtained, he satisfies the applicable test for the setting aside of default judgment.
34National Bank argues that default judgment was not irregularly obtained. National Bank also argues that Buhay does not satisfy the applicable test for setting aside of the default judgment.
35The applicable Rules with respect to the setting aside of noting in default and default judgment are 19.03(1) and 19.08(1). Rule 1.04(1) is also applicable.
36As stated by Justice Borins in Royal Trust Corp. of Canada v. Dunn, [1991] O.J. No. 2231 (Ont. Gen.Div.) there are two situations in which the court is able to set aside default judgment. The first is when a defendant is able to establish that the default judgment was irregularly obtained, in which case normally the defendant can have default judgment set aside as of right. The second is when default judgment has been regularly obtained and the court is asked to exercise its discretion to set aside default judgment based on satisfaction of a number of conditions.
37National Bank served Buhay with the statement of claim by regular mail pursuant to a court order for substitute service dated December 9, 2026. The three addresses for service by regular mail listed in the order did not include 429 Esker.
38In my view default judgment was irregularly obtained and ought to be set aside. On the balance of probabilities, I am satisfied that Buhay did not receive a copy of the statement of claim notwithstanding that it was served in accordance with the court order. I am satisfied that Buhay was not residing at any of the three addresses listed in the order. As stated by Justice Borins in Royal Trust:
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.
39If I am wrong and if default judgment was regularly obtained, I am satisfied that it is in the interests of justice that the default judgment ought to be set aside.
40In Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194 at paras. 47-50, Justice Gillese discusses the factors to be considered (see also 420-450 Brittania Road East Ltd. v. Kennedy Transportation Network Ltd., 2015 ONSC 1791 (Ont. S.C.J.) at para. 47). The factors are:
(i) whether the motion was brought promptly after the defendant learned of the default judgment;
(ii) whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules;
(iii) whether the facts establish that the defendant has an arguable defence on the merits;
(iv) the potential prejudice to the defendant should the motion be dismissed, and the potential prejudice to the plaintiff should the motion be allowed; and
(v) the effect of any order on the overall integrity of the administration of justice.
41As stated in Mountain View at paras. 50-51:
50These 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.
51For 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.
42I find that Buhay did not move promptly to set aside default judgment after learning of it. Based on Buhay’s evidence, he first learned of this action and default judgment when he learned of the writ through his real estate lawyer when selling his cottage in June 2023. He did not retain a lawyer to bring this motion until August 2024. Buhay’s evidence is that he had been searching for a lawyer since the sale of his cottage. Not retaining a lawyer to bring this motion for approximately 13 months resulted in the motion not being brought promptly. The evidence before me does not satisfy me that the time it took to retain a lawyer was reasonable in the circumstances. In determining that the motion was not brought promptly, I do not take issue with the timing of the steps taken by Buhay’s current counsel once he was retained.
43I am satisfied that there is a plausible excuse or explanation for Buhay’s default. As noted above, I am satisfied that Buhay did not receive a copy of the statement of claim although served in accordance with the order for substitute service. The order provided for service at addresses where Buhay was not residing during the relevant times. There is no evidence of any other service of the claim.
44I am satisfied that Buhay’s defence has an air of reality. Buhay’s defence is that he had no knowledge of the conditional sales contract and that his signature was forged. Buhay’s evidence is that he did not purchase or make payments toward or ever see the vehicle and never met with Queen Auto. Buhay’s counsel also confirms to the court that if default judgment is set aside, a handwriting expert will be retained.
45Due to Perreault’s inability to provide evidence as a result of physical and cognitive issues and now his death, there is prejudice to National Bank if the default judgment is set aside. However, this is prejudice that arose when Perreault sustained serious injury in a fall in July 2022. This prejudice arose before Buhay learned of the default judgment in June 2023.
46There is prejudice to Buhay if the default judgment is not set aside. He has paid the amount owing pursuant to the default judgment without an adjudication on the merits and will have no opportunity to defend the action and have a determination of the merits.
47In all the circumstances, I am satisfied that the overall integrity of the administration of justice supports the setting aside of the default judgment and a determination of the merits.
48Having regard to all the factors and in the circumstances of this case, I am satisfied that it is in the interests of justice that the default judgment and noting in default be set aside.
49With respect to the setting aside of the Registrar’s dismissal order, this is an unusual case where a defendant is moving to set aside the dismissal order in an action that had been terminated against him prior to the dismissal order.
50Having found that it is in the interests of justice that the default judgment be set aside, I am also satisfied that it is in the interests of justice in the circumstances that the Registrar’s dismissal order be set aside as against Buhay to permit the proceeding against Buhay to be determined on its merits.
51To the extent that the Reid factors are applicable (see Iacolucci v. TD Waterhouse Canada Inc., 2018 ONSC 1027 (Ont. Div.Ct.) at paras. 37-43), Buhay was unaware of the proceeding until June 2023. Buhay did not receive a copy of the Registrar’s dismissal order. The order noted the 191 Hemlock address where he never resided. Buhay could not have set the action down for trial without first setting aside the default judgment. This motion was brought promptly after Buhay learned of the dismissal. Prejudice to National Bank relating to Perreault arose prior to Buhay learning of this action.
52In determining this motion, I am also mindful of the principal of finality in litigation. However, I am satisfied that Buhay only became aware of this proceeding in June 2023, and was not aware of the dismissal order until January 2025.
53I am not prepared to order that the monies paid by Buhay to discharge the writ be returned to him at this time. At the time that the monies were paid by Buhay, they were paid without condition. I am prepared to grant the alternative relief that the amount paid to discharge the writ shall be paid into court by National Bank.
54The time to issue a third party claim against Queen Auto is extended to 60 days from today’s date.
55Order to go as follows:
The order of the Registrar dismissing the action for delay dated October 16, 2024, is set aside as against Buhay only;
The noting in default of Buhay is set aside;
Default judgment against Buhay dated March 10, 2017, is set aside;
The time for Buhay to deliver a statement of defence (not a crossclaim) is extended to 30 days from today’s date;
Monies paid by Buhay to National Bank to discharge the writ shall be paid into court by National Bank pending disposition of this matter, or further order of this court;
The time for Buhay to issue and serve a third party claim as against Queen Auto is extended to 60 days from today’s date.
56At the hearing, when I requested oral submissions on costs in the event the motion was successful or was not successful, I was advised of the existence of offer(s) to settle. In the circumstances, I advised the parties that I would defer costs submissions until the motion had been determined.
57If any party seeks costs, the parties shall make reasonable efforts to resolve the issue of costs. If after making such efforts the parties are unable to agree on costs, any party seeking costs shall serve and file brief written submissions on costs of three pages or less in length on or before June 16, 2026, together with any offer(s) to settle relied upon. Any responding submissions shall also be three pages or less in length and served and filed on or before June 30, 2026, together with any offer(s) to settle relied upon. Any reply submissions shall be no more than one page in length and served and filed on or before July 7, 2026. The submissions shall be submitted by email to Assistant Trial Coordinator Teanna.Charlebois@ontario.ca and shall be accompanied with an affidavit of service. Costs outlines have been uploaded to Case Center.
Associate Justice B. McAfee
Date: May 19, 2026