The Ontario Superior Court set aside the default judgment due to the Plaintiff's failure to give notice to the Defendants and to make full and fair disclosure of material facts to Penny J.
In the underlying proceeding, the Plaintiff alleges that the Defendant Canadian Tire retained the Defendant Jiangsu Sainty Sumex to copy the Plaintiff's goods, its packaging and design get up, and its copyrighted materials. The Plaintiff claims that the Defendants have been unlawfully manufacturing and selling the copied goods for the last number of years in violation of the plaintiff's intellectual property rights causing it to suffer damages.
The Plaintiff was granted default judgement after an undefended trial that the Plaintiff booked and held without notice to counsel for either Defendant. While the default judgment was granted only against Jiangsu Sainty Sumex, the declarations that the Plaintiff has trade-marks and copyright are in rem determinations. The Court found that Canadian Tire was plainly affected in its legal and direct economic interests by this relief sought by the Plaintiff. The Court noted that the Plaintiff should have notified Canadian Tire before such relief and as a result, the default judgment could not bind Canadian Tire.
The Court also set aside the default judgment of Jiangsu Sainty Sumex again for failure to notify counsel for the Defendant. The Court agreed that Jiangsu Sainty Sumex had been more than coy in its response or its non-response to the proceeding prior to the default judgment. However, the Court found that at the very least, the Plaintiff should have disclosed to Penny J. that Jiangsu Sainty Sumex had counsel. In addition, the Plaintiff ought to have given notice to Jiangsu Sainty Sumex' counsel that it would not wait any longer for the Defendant to bring its motion to set aside the noting in default. Finally, the Court decided to only set aside the noting in default of Jiangsu Sainty Sumex when and if the Defendant complied with specific terms under Rules 1.05, 19.03(1), and 19.08(3) of the Rules of Civil Procedure.