Executive Summary: Key Legal and Evidentiary Issues

• Robertson J. considered whether a default judgment, granted after a hearing the applicant did not attend, should be set aside under Rule 10-13 of The King's Bench Rules.
   
• Discrepancies in the address used for substitutional service raised questions about whether the defendant received actual notice of the claim.
   
• Five factors drawn from Sparrow v Schnurr and Blackbird Security Inc. v EyeQ Security Services Inc. governed the analysis, including delay, explanation for default, arguable defence, prejudice, and exceptional circumstances.
   
• Photographic evidence of postings on the defendant's gate weighed heavily against a finding that service had failed.
   
• Only the "arguable defence" factor favoured the applicant, based on an alleged breach of a purchase-and-sale contract.
   
• The application to set aside the default judgment was ultimately dismissed, with no order for costs due to the address errors in service.
   

Facts of the case

Ingrace Canada Farms Ltd. issued a Statement of Claim against Huaili Li on February 21, 2023. After unsuccessful attempts at personal service, the plaintiff obtained an order authorizing substitutional service by posting documents to the gate of Mr. Li's residence and by regular mail. Mr. Li was noted for default on October 5, 2023. In 2025, Ingrace applied for recovery of land or $264,416.23 plus pre-judgment interest and costs. That application was heard by Currie J. on September 23, 2025, and on September 24, 2025, Currie J. issued a fiat granting judgment in the plaintiff's favour for $264,416.23. An order for payment of that amount plus costs of $968.49 was issued September 25, 2025. Mr. Li acknowledged receipt of the Order on October 30, 2025, but did not file his Notice of Application to set aside the noting for default and the Order until April 13, 2026, over five months later.

Policy and legislative provisions at issue

The application was brought under Rule 10-13 of The King's Bench Rules, which permits the Court to set aside or vary a default judgment, whether arising from non-delivery of a defence or non-compliance with the Rules or a Court order, on such terms as to costs or otherwise as the Court considers fit. Robertson J. also relied on the Court's inherent jurisdiction to set aside default judgments in cases involving special circumstances such as fraud, lack of jurisdiction, irregularity, perjury, or new evidence, as recognized in Toronto-Dominion Bank v Prairie Gold Oilfield Servicing Ltd. Because the underlying judgment had been granted after a hearing at which evidence was presented, the Court applied the more stringent test set out in Blackbird Security Inc. v EyeQ Security Services Inc., which distinguishes default judgments obtained purely for failure to file a defence from those granted after consideration of the merits.

Reasoning and analysis

Robertson J. applied the five-factor test derived from Sparrow v Schnurr and Blackbird: whether the application was made as soon as possible; whether the applicant provided a satisfactory explanation for failing to defend; whether an arguable defence was disclosed; whether setting aside would seriously prejudice the plaintiff; and whether exceptional circumstances existed. On the first factor, the Court found Mr. Li waited more than five months after becoming aware of the Order before applying to set it aside, with no satisfactory explanation for the delay, so this factor weighed against setting aside. On the second factor, the Court reviewed conflicting evidence about the address used for service, noting errors in the street name ("Blenkisop" instead of "Blenkinsop") and street number ("4586" instead of "4589") in some affidavits of mailed service, but found that photographic evidence from multiple affidavits of posting to the gate consistently showed the correct address and matched photographs Mr. Li himself submitted. The Court concluded it was difficult to accept that Mr. Li lacked actual notice, and this factor also weighed against setting aside. On the third factor, the Court accepted that Mr. Li's draft statement of defence, alleging Ingrace failed to complete a contract for purchase and sale and that Mr. Li sought return of his deposit, disclosed an arguable issue, so this factor favoured setting aside. On the fourth factor, the Court found the plaintiff would be prejudiced by being returned to its 2023 litigation position after a 23-month interval, weighing against setting aside. On the fifth factor, the Court found no exceptional circumstances of the kind described in Blackbird — such as fraud, serious illness, or deliberate concealment by the plaintiff — that would justify setting aside the Order on fairness and equity grounds.

Ruling and overall outcome

Robertson J. concluded that, on balance, the factors weighed against setting aside the Order and that dismissal of the application accorded with the principles of fundamental justice. The application to set aside the noting for default and the Order was dismissed, leaving intact the underlying judgment in favour of Ingrace Canada Farms Ltd. for $264,416.23 plus costs of $968.49. Although Ingrace, as the successful party in defending the application, would normally have been entitled to costs, the Court exercised its discretion to make no order for costs in light of the errors in the address used for mailed service.