Executive Summary: Key Legal and Evidentiary Issues

• Whether the Defendants could set aside a noting in default and a registrar-signed default judgment turned on the five Mountain View Farms factors applied under rule 19.08(1).
   
• Promptness was undisputed, as defence counsel wrote to Meridian’s counsel the same day Mr. Mian learned of the judgment and the motion materials were filed ten days later.
   
• The death of Mr. Mian’s wife, his travel to Pakistan for mourning rituals, and his involvement in numerous other legal proceedings together formed a plausible explanation for the default.
   
• An alleged 2017 representation that Meridian would not enforce the guarantees before realizing on the mortgaged properties gave the defence an air of reality, notwithstanding Meridian’s reliance on entire agreement clauses.
   
• Meridian’s claimed prejudice was outweighed, since its affiant admitted having no evidence of creditor prioritization beyond the Defendants’ other litigation, and Meridian held mortgages on both properties.
   
• Writs of Seizure and Sale filed three days after notice of the set-aside motion were vacated to avoid “execution before judgment.”
   

Facts of the case

Meridian Credit Union Limited is an Ontario corporation established under the Credit Unions and Caisses Populaires Act, 2020. Liaquat Mian is the sole registered officer and director of two corporations, LJM Developments (Stoney Creek) Inc. and SNAM Investment Group Inc. LJM is a defendant in the action alongside Mr. Mian, while SNAM is not.

According to Meridian, its first loan was made to LJM in July 2017 to assist with construction financing on a property at 325 Highway 8, Stoney Creek. Mr. Mian signed a guarantee in connection with that credit agreement. Between July 2017 and January 2018, Meridian says it advanced a total of $1,890,499 to LJM to refinance the existing land loan and cover soft costs, and in 2022 it increased the loan to $3,675,000 after the Ontario Land Tribunal approved a 148-unit development. Meridian also says it made an initial loan to SNAM in or around March 2018 for a project at 540 and 544 North Service Road in Grimsby.

On November 21, 2024, Meridian entered into further credit agreements with both companies. LJM’s agreement provided a loan facility of up to $3,675,000 and two letters of credit for $10,650 and $98,857, with security to include Mr. Mian’s unlimited personal guarantee from 2017 and a limited guarantee from SNAM. Under SNAM’s agreement, Meridian would extend or renew the initial SNAM loan, secured by an additional guarantee from Mr. Mian and a guarantee from LJM limited to $2,227,500. The guarantees were signed in February 2025.

Both companies missed loan payments in late 2025. Meridian says that as of February 11, 2026, SNAM owed $2,178,774.38 and LJM owed $3,708,481.12, for a total of $5,887,255.50. It demanded payment of both amounts from Mr. Mian under his personal guarantee, and demanded payment from LJM for SNAM’s debt, which exceeded the limit of LJM’s guarantee.

Meridian issued its Statement of Claim on April 28, 2026. Mr. Mian’s wife had died on March 20, 2026, after which he travelled to Pakistan to observe traditional mourning rituals. He was served with the claim on May 21, 2026, the day he returned to Canada. His evidence was that he then contacted a real estate broker about selling the two properties and was told he would receive a sales presentation, which he says he never received. He also said the LJM group of companies had been involved in approximately thirty-seven legal proceedings, and that he intended to defend this action if it did not settle.

Neither defendant filed a defence. On June 24, 2026, four days after the deadline to defend had passed, Meridian obtained default judgment against Mr. Mian for $6,032,985.24 and against LJM for $2,232,706.51. Mr. Mian says he first learned of the judgment on July 3, 2026, and defence counsel wrote to Meridian’s counsel that same day to advise that a motion to set it aside would be brought. Meridian did not consent and filed Writs of Seizure and Sale on July 6, 2026. After the Defendants sought an urgent motion, the parties appeared on July 15, 2026, when the court determined there was no urgency requiring a date ahead of the available booking dates. September 24, 2026 was then booked for the hearing.

Policy and legislative provisions at issue

Rule 19.08(1) gives the court discretion to set aside or vary a default judgment signed by the registrar, or granted on motion under rule 19.04, on such terms as are just. The court’s task, drawing on Zahiri v. Alizadeh et al., 2026 ONSC 5082, is to decide whether the interests of justice favour the order. Five factors from the Court of Appeal’s decision in Mountain View Farms Ltd. v. McQueen guide that inquiry: promptness of the motion, a plausible explanation for the default, an arguable defence on the merits, the relative prejudice to each side, and the effect of the order on the integrity of the administration of justice.

The contractual dispute centred on Mr. Mian’s guarantees. He alleged that during the 2017 negotiations, Meridian represented it would not enforce the guarantees before realizing on the mortgaged properties and applying the proceeds to the debt. Meridian pointed to the text of the guarantee, which it said provided the opposite, and argued that each guarantee contained an entire agreement clause requiring the representation defence to be rejected.

Reasoning and analysis

Meridian relied on the formulation of the test in Marshallzehr Group Inc v. Mahfooth, 2026 ONSC 4951. Acknowledging that the two may effectively be different articulations of the same test, the court preferred the Mountain View line of cases, including McIlwain v. Len’s Cove Marina Ltd., 2025 ONCA 434. Court of Appeal authority treats the factors as flexible rather than rigid rules, and McIlwain adds that they need not be weighed equally, with the weight of each depending on the circumstances.

Promptness was not in dispute. Counsel contacted Meridian on the day Mr. Mian learned of the judgment, materials were filed ten days later, and the Defendants sought an urgent motion. On the explanation for the default, Meridian did not dispute the account of the death of Mr. Mian’s wife, his trip to Pakistan, and his involvement in numerous other proceedings amid what he described as a severe downturn in the Greater Toronto Area condominium market. Its argument instead was that the volume of other lawsuits would let the Defendants keep prioritizing other creditors. The court noted there was no evidence of that and, observing that the delay was at most 14 days, accepted the explanation as plausible.

Most of the hearing focused on whether an arguable defence existed. Citing Kantor v. Grewal et al., 2025 ONSC 1542, Meridian argued the court could take a hard look at the merits and assess credibility, and that a self-serving affidavit without detailed supporting evidence could not create a triable issue. The court instead applied McIlwain and Mountain View, under which a defence need only have an “air of reality,” and the motion judge’s role is not to weigh evidence or make findings of fact. Mr. Mian’s sworn evidence that the representation was made during the 2017 negotiations went uncontradicted, because Meridian’s affiant had not been involved in those negotiations. On the entire agreement argument, Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, holds that a misrepresentation defence is not precluded or diminished merely because such a clause exists. The court found the defence tenable in law, while stressing that this was not a summary judgment motion and that it was not finding the defence would succeed or that a genuine issue requiring a trial existed.

Even without an arguable defence, the court said it would not have given that factor particular weight. In Milton, a plaintiff may obtain default judgment at the same time as noting a defendant in default, so a motion to set aside a registrar-signed judgment resembles a motion to set aside a noting in default, where courts rarely require an arguable defence. Greater weight would have applied had the judgment been granted on motion under rule 19.04(1) or rule 19.05.

On prejudice, Meridian pointed to approximately $6,000,000 in joint indebtedness in arrears since late 2025 and said its judgment and writs did not stop the Defendants from selling or refinancing the properties. The Defendants countered that they had lost the chance to present their defences, that Meridian’s debts remained secured by mortgages, and that the concern about favouring other creditors was speculative. The court accepted that Meridian might suffer prejudice not compensable in costs but found it outweighed by the Defendants’ loss of a hearing on the merits and their exposure to judgments and enforcement. On cross-examination, Meridian’s affiant admitted having no evidence of creditor prioritization other than the Defendants’ involvement in other litigation, and also admitted that Meridian had no appraisal of the second property’s fair market value. Nothing in the record showed the properties were losing value. Integrity of the administration of justice likewise favoured the Defendants, given the strong interest in deciding cases on their merits and a delay of no more than 14 days shortly after Mr. Mian’s wife died.

Meridian asked, in the alternative, that the writs remain in place, relying on The Toronto Dominion Bank v. Picard, 2020 ONSC 1289, to argue that the integrity of the administration of justice required its security to be preserved. That decision notes that maintaining writs after a default judgment is set aside is generally discouraged because it effectively turns the seizure into execution before judgment. The court refused to keep the writs for two reasons. Meridian already held mortgages on both properties, and it had filed the writs three days after being told the Defendants would move to set the judgment aside.

Ruling and overall outcome

The court granted the Defendants’ motion. Both the noting in default and the default judgments for $6,032,985.24 against Mr. Mian and $2,232,706.51 against LJM were set aside, and the Writs of Seizure and Sale were vacated. Sheriffs in every enforcement office where the writs were filed were directed to withdraw and cancel them, and Land Titles registrars were directed to discharge and delete any registrations. Mr. Mian and LJM received leave to serve and file a Statement of Defence within twenty days of the October 9, 2026 decision. No monetary amount was awarded to the Defendants. Costs of the motion were left for the parties to agree on. Failing agreement, each side may file written submissions on a fixed timetable, and no costs order will be made if submissions are not delivered as directed, so no costs figure can be determined from this decision.