





CITATION: 1565703 Ontario Limited v. St. Clair Tavern
      (Sarnia) Limited, 2011 ONCA 523



DATE: 20110718



DOCKET: C53378



COURT OF APPEAL FOR ONTARIO



Laskin, Simmons and Epstein JJ.A.



BETWEEN:



1565703 Ontario Limited



Plaintiff (Respondent)



and



St. Clair Tavern (Sarnia) Limited



Defendant (Appellant)



Carolyn Brandow, for the appellant



Jennifer Quick, for the respondent



Heard: July 15, 2011



On appeal from the order of Justice
          Joseph M. Donohue of the Superior Court of Justice, dated January 28, 2011.



APPEAL BOOK ENDORSEMENT



[1]

We are not satisfied that the respondent properly proved its default
    judgment.  Although this issue was not raised before the motion judge, it is in
    the interests of justice to set aside the default judgment to permit the
    appellant to contest the quantum of the respondents claim.  The appellant will
    then be at liberty to pursue its claim for rental arrears as a counterclaim in
    the litigation.  In the light of the delay in this action already, the
    appellant must deliver its statement of defence and any counterclaim within 10
    days of the entry of this order.

[2]

In order to protect the respondents position we think it appropriate
    that any writ of execution that is filed in respect of its default judgment
    remain on title.

[3]

As the issue on which we are setting aside the default judgment was not
    raised before the motion judge, we think that the respondent is still entitled
    to the costs of the motion.  However, in our view, the motion judge erred in
    awarding substantial indemnity costs.  We vary these costs to $8,336.13,
    inclusive of disbursements and applicable taxes.  The respondent is also
    entitled to its costs thrown away of obtaining the default judgment.

[4]

The appeal is allowed and the default judgment is set aside on the terms
    set out in this endorsement.  In the circumstances there shall be no costs of
    the appeal.


