Executive Summary: Key Legal and Evidentiary Issues

• Goyal Impex Inc. moved under Rule 399 of the Federal Courts Rules to set aside a default judgment that Multiform Shipping Inc. had obtained for unpaid shipping-related invoices.
• Central to the motion was whether personal service left with a driver at GII's premises satisfied the "person apparently in charge" standard in Rule 130(1)(a)(ii).
• The Court applied the conjunctive three-part test for setting aside a default judgment, under which failure to establish any single element is fatal to the motion.
• Process-server evidence established that the driver held himself out as connected to GII and accepted the documents knowing they were legal in nature.
• GII's supporting exhibits were found to be mischaracterized, and Mr. Goyal's assertion that he was unaware of the proceeding until enforcement began was deemed not credible.
• Because GII could not provide a reasonable explanation for its failure to file a defence on time, the Court dismissed the motion and ordered reduced costs.

Facts of the case

Multiform Shipping Inc. (MSI) is an Ontario-incorporated freight forwarding company. Goyal Impex Inc. (GII) is an Ontario-incorporated company that imports packaged foods and other foodstuffs. The two had a business relationship dating to approximately 2023, under which GII purchased goods from overseas suppliers, mainly in India, and arranged ocean shipment of its cargoes to Canada. MSI acted as the local Canadian freight forwarder, coordinating with ocean shipping lines, rail lines, and trucking companies to move GII's cargoes, paying the associated fees and expenses on GII's behalf, and then invoicing GII for those amounts plus its own service fees.

On February 13, 2026, MSI filed a Statement of Claim against GII seeking, among other relief, damages of $300,000 for unpaid invoices covering freight, demurrage, detention, storage, and other related costs tied to shipments from India to Canada. A process server, Mervyn Archdall, swore an affidavit of service on February 23, 2026, confirming that the claim had been served on GII on February 19, 2026, by leaving a copy with Gurpreet Singh, a driver, at GII's offices. That same day, MSI's counsel emailed a courtesy copy of the claim to GII's President, Shubham Goyal. The time to file a Statement of Defence expired on March 23, 2026, and MSI filed an ex parte motion for default judgment on April 20, 2026. On April 30, 2026, Justice Strickland granted the motion, was satisfied that service had been effected under Rule 130(1)(a)(ii), and ordered GII to pay MSI a total of $313,331.49 for unpaid invoices and interest. MSI then began enforcement and garnishment. GII filed the present motion to set aside the default judgment on May 29, 2026, and also sought an interim injunction restraining MSI from taking further enforcement and garnishment action.

Statutory and procedural provisions at issue

The motion was brought under Rule 399 of the Federal Courts Rules, which allows a party to seek to set aside a judgment. The dispute turned on the service rules for corporations. Rule 130(1)(a)(ii) permits personal service on a corporation by leaving the document "with the person apparently in charge, at the time of the service, of the head office or of the branch or agency in Canada where the service is effected." This is an alternative to Rule 130(1)(a)(i), which contemplates service on an officer, director, or a person employed by the corporation as legal counsel. MSI's counsel clarified at the hearing that MSI was not asking the Court to retroactively validate service by email under Rule 147; rather, the courtesy email was raised only as part of the overall factual matrix.

The court's reasoning and analysis

Justice Turley set out the conjunctive three-part test a party must satisfy to set aside a default judgment: a reasonable explanation for failing to file a defence, a prima facie defence on the merits, and having moved promptly or within a reasonable time. Because the test is conjunctive, failure on any one element defeats the motion, and the Court noted that setting aside an order, even one made ex parte, is not done lightly. The Court focused on the first element and found it dispositive.

On the meaning of "apparently in charge," the Court reasoned that "apparently" means "appears to be" or "seems to be," consistent with the dictionary sense of "to external appearance" or "seemingly." The person served need not actually be in charge but need only appear to be in charge from the perspective of the process server at the time of service. The Court reviewed earlier authorities, including a decision in which service on a receptionist was found valid, noting that the jurisprudence has largely concerned whether service occurred at the defendant's head office, branch, or agency.

Turning to the evidence, the Court examined Mr. Archdall's affidavits. His original affidavit described Mr. Singh as a person who appeared to be in control or management of the place of business, and his further affidavit explained that the premises were a warehouse-type building, that both Mr. Singh and another man present confirmed Mr. Singh worked for GII, that Mr. Singh identified himself as a driver, and that Mr. Singh agreed to accept documents he was told were legal in nature. GII's contrary evidence, chiefly Mr. Goyal's affidavit stating that Mr. Singh had ceased working for GII in October 2024 and lacked authority to accept service, was found unpersuasive because it did not address whether Mr. Singh appeared to be in charge, and because GII did not tender any evidence from Mr. Singh disputing the process server's account. The Court also raised concerns about the accuracy of GII's exhibits: a document described as an employee list from 2020 to 2026 was in fact a screenshot of a paycheque list for Mr. Singh covering three pay dates between September 6 and October 4, 2024, and documents described as GII's T4 Summary for 2024 and 2026 were instead T4 slips for employees. The Court concluded that Mr. Archdall's assessment of Mr. Singh as apparently in charge was entirely reasonable and that valid personal service had been effected under Rule 130(1)(a)(ii).

Although this finding was sufficient to dispose of the motion, the Court further found Mr. Goyal's claim that he only learned of the claim once enforcement began to be not credible. It defied common sense that Mr. Singh would accept documents known to be legal yet fail to pass them to management, and no explanation or evidence from Mr. Singh was offered. Mr. Goyal's assertion that he never received the courtesy email was likewise found not credible, as he provided no corroboration, such as a screenshot of a spam folder, and no evidence of any alternative business email. MSI's President, Abhishek Rana, gave evidence that the email address in question was used regularly by Mr. Goyal for business, that a records search revealed nearly 1,200 emails involving that address exchanged since 2023, and that the address appeared in Mr. Goyal's signature line and on his GII business card. The Court found this contradicted GII's position and concluded, on the totality of the evidence, that it was not credible Mr. Goyal had neither been given the claim by Mr. Singh nor received the courtesy email on February 19, 2026.

Ruling and overall outcome

The Court held that GII failed to meet its burden of establishing a reasonable explanation for not filing a Statement of Defence within the prescribed time, and dismissed the motion to set aside the default judgment. Multiform Shipping Inc. was the successful party. On costs, MSI had sought $7,500 (the amount ordered on the default judgment motion), but its counsel acknowledged that this motion required less work; the Court therefore fixed costs at $5,000 payable by GII to MSI. The monetary amount ordered in MSI's favour on this motion was $5,000 in costs.