Leaf Homes Limited v. Khan

Leaf Homes Limited v. Khan

Default judgment set aside because appellants demonstrated an arguable defence with an air of reality and the motion judge made reversible palpable and overriding factual errors (notably on service and credibility). The personal costs order was set aside because r.57.07(2) was breached — counsel was not given a...

Source-derived case information.

Citation
2022 ONCA 504
Parties
Plaintiff (respondent): Leaf Homes Limited; Defendant (appellant): Farrukh Shahzad Khan; Defendant (appellant): Nadia Parveen Khan
Court
Court of Appeal for Ontario
Jurisdiction
Canada
Judgment Date
30 June 2022
Procedural Posture
Civil / Appeal From Motion Decision to Set Aside Default Judgment
Outcome
Appeal allowed in full. Default judgment and noting in default set aside; Personal Costs Order and Costs Order set aside; appellants permitted to file and serve statement of defence and counterclaim within ten days; respondent ordered to pay appellants costs of fresh evidence motion and appeal on a substantial...
Legal Topics
Default Judgment, Setting Aside Judgment, Service of Process, Personal Costs Order Under Rule 57.07, Substantial Indemnity Costs, Fresh Evidence (palmer Test), Mitigation of Damages, Appellate Review of Discretionary Decisions
Source Language
english
Contract Law Civil Procedure Costs Law Professional Responsibility Equity and Remedies Default Judgment Setting Aside Judgment Service of Process +5 more

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Parties

Leaf Homes Limited

Plaintiff (respondent)

Farrukh Shahzad Khan

Defendant (appellant)

Nadia Parveen Khan

Defendant (appellant)

Procedural Posture

Civil / Appeal From Motion Decision to Set Aside Default Judgment

Legal Issues

  1. 1 Whether the default judgment should be set aside
  2. 2 Whether the Statement of Claim was validly served
  3. 3 Whether appellants had an arguable defence on the merits (misrepresentation/pressure)

Ratio Decidendi

Default judgment set aside because appellants demonstrated an arguable defence with an air of reality and the motion judge made reversible palpable and overriding factual errors (notably on service and credibility). The personal costs order was set aside because r.57.07(2) was breached — counsel was not given a reasonable opportunity to make representations — and the order rested on factual errors revealed by admitted fresh evidence; fresh evidence was admitted under Palmer and materially affected the result; consequential costs and orders were adjusted (respondent ordered to pay appellants substantial indemnity costs for appeal and fresh evidence motion fixed at $25,000).

Court Disposition

Appeal allowed in full. Default judgment and noting in default set aside; Personal Costs Order and Costs Order set aside; appellants permitted to file and serve statement of defence and counterclaim within ten days; respondent ordered to pay appellants costs of fresh evidence motion and appeal on a substantial...

Orders

  • Set aside default judgment dated April 18, 2019 and noting in default
  • Set aside personal costs order against counsel (order for CAD 1,575)