Executive Summary: Key Legal and Evidentiary Issues

• Compliance with contractual obligations to convey property and remit proceeds under an Agreement of Purchase and Sale.

• Timeliness and adequacy of communication and service of legal documents between parties and their counsel.

• Assessment of whether the defendants provided a reasonable excuse for delay in filing a defence.

• Evaluation of the merits of the defendants’ proposed defence to the plaintiff’s claims.

• Consideration of the court’s discretion in setting aside default judgments.

• Determination of the appropriate process for awarding costs following the decision.

Background and facts of the case

V & E International Trading Ltd. entered into an Agreement of Purchase and Sale with Olde Town Hills Community Limited and Hossam Elodka for eight building lots to be subdivided from a larger parcel of land. The plaintiff prepaid the full purchase price of $587,000 plus HST. The agreement contemplated the subdivision and conveyance of the lots in two phases, with the first four lots to be approved and transferred by November 30, 2020, and the remaining four to follow upon further subdivision approval. After approval of the first four lots in April 2021, the parties agreed to postpone closing until market conditions improved, with title remaining in Olde Town Hills’ name.

Olde Town Hills subsequently sold two of the four approved lots for $160,000 plus HST, remitting the net proceeds to V & E International but not the $24,000 in HST collected. Another of the four lots was sold without the plaintiff’s knowledge, and the plaintiff was offered a substitute lot. Title to the remaining lots was not conveyed, despite efforts by the plaintiff’s director to complete the transfers. The plaintiff’s attempts to resolve the matter amicably failed, leading to the commencement of legal proceedings.

Procedural history and service of documents

V & E International filed a Notice of Action and Statement of Claim in September 2023, later amended to include additional damages. Service of documents was complicated by difficulties in reaching the defendants, with service ultimately effected on Olde Town Hills’ recognized agent. The defendants failed to file a defence within the required time, resulting in default judgments being entered against them. Dr. Elodka, principal of Olde Town Hills, attributed the delay to personal circumstances and oversight, including missing an important email due to family events.

Discussion of policy terms and clauses at issue

The central policy terms at issue were the obligations under the Agreement of Purchase and Sale, including the timely conveyance of property, remittance of sale proceeds and HST, and the handling of substituted lots. The defendants argued that delays in subdivision approval justified the lack of transfer for some lots and that no HST was collected on certain sales due to self-assessment by purchasers. The plaintiff maintained that the agreement’s terms were not fulfilled and that the defendants’ explanations were insufficient.

Court’s analysis and outcome

The Supreme Court of Nova Scotia considered whether to set aside the default judgments. The court applied the established two-part test: whether the defendants had a fairly arguable defence and whether there was a reasonable excuse for the delay in filing a defence. While the court found that the defendants met the low threshold for an arguable defence, it concluded that the excuse for delay—overlooking an email for several months—was not reasonable or credible. The court was influenced by evidence of the defendants’ lack of diligence and efforts to delay or frustrate the plaintiff’s attempts to enforce the agreement.

Ruling and overall outcome

The court dismissed the motion to set aside the default judgments, leaving the judgments in favor of V & E International Trading Ltd. in place. The precise amount of the monetary award is not specified in the decision, but the plaintiff’s amended claim seeks special damages of $461,000 plus HST, along with prejudgment interest, punitive damages, and costs. The court directed the parties to attempt to agree on costs, with further submissions to be made if necessary. V & E International Trading Ltd. is the successful party, but the exact total amount ordered remains to be determined based on the terms of the default judgment and any subsequent decision on costs.