Executive Summary: Key Legal and Evidentiary Issues

• Acadia Atlantic ULC mistakenly served its statement of claim on the wrong Michael Mullett due to an incorrect address obtained from the Registry of Deeds.

• The incorrectly served Michael Mullett filed a defence and a $300,000 counterclaim alleging mental suffering, defamation, and injury to reputation despite having no connection to the underlying contract dispute.

• Default judgment was obtained on the counterclaim after Acadia's counsel marginally exceeded the filing deadline, even though ongoing email correspondence demonstrated clear intent to defend.

• Counsel for Michael Mullett pursued default judgment despite ongoing communications from Acadia's counsel demonstrating a clear intention to defend, and his supporting document failed to meet affidavit formalities required under Rule 48.01 of the Rules of the Supreme Court.

• Standing was a central issue, as the served Michael Mullett was not a party to the contractual relationship underlying Acadia's claim and therefore lacked standing to file pleadings or a counterclaim in the proceeding.

• The Court applied principles from Langor v. Spurrell and Loder v. Loder to assess the merits of setting aside default judgment and striking the defence and counterclaim.

The facts of the case

Acadia Atlantic ULC filed a statement of claim in the Supreme Court of Newfoundland and Labrador on September 23, 2024, against Michael Mullett and Wade Mercer, alleging the defendants owed $180,009.10 for goods and services that it provided under a contract with them, starting on August 19, 2020. Acadia retained a process server, Tony Dunne, to serve the statement of claim on Michael Mullett at 95 Cumberland Crescent, St. John's, Newfoundland and Labrador, an address Acadia's counsel located through a search of the provincial Registry of Deeds. Mr. Dunne served a person at that address on November 22, 2024, who identified himself as the defendant named in the claim.

The case of mistaken identity

It quickly became apparent that the Michael Mullett residing at 95 Cumberland Crescent was not the individual with whom Acadia had a contractual relationship. The correct Michael Mullett actually lived at 26-28 Delaney's Avenue, Shearstown, NL. Despite this, the incorrectly served Michael Mullett retained counsel and, just four days after being served, filed a statement of defence and counterclaim on November 26, 2024. In his counterclaim, Mr. Mullett asserted he was not the intended defendant and claimed that Acadia's statement of claim had impugned his integrity, reputation, and character, causing him to suffer mental anguish and distress as well as placing a derogatory notation on his credit history. He sought $300,000 in general damages for mental suffering, defamation, and injury to his reputation. Mr. Mullett's counsel later advised that Mr. Mullett was actually outside the country receiving medical treatment when the statement of claim was received at his address by his husband, and that counsel took instructions from his client by telephone while the latter remained outside the country.

The timeline of communications and the default judgment

Following service, the lawyers for both sides exchanged a series of emails between December 2 and December 19, 2024. On December 3, 2024, Mr. Mullett's counsel informed Acadia's counsel that his client was not the Michael Mullett named in the statement of claim, whereupon Acadia's counsel halted further steps on the claim and sought instructions from his client. On December 6, Acadia's counsel contacted Mr. Mullett's counsel to schedule a meeting by telephone and expressed concern with the ten-day deadline to respond as stated in the notice of counterclaim. By December 13, the two counsel had exchanged their opposing views on the viability of Michael Mullett's counterclaim, and Acadia's counsel undertook to provide a defence to the counterclaim the following week. On December 17, Mr. Mullett's counsel inquired whether the defence had been filed. On December 18, Acadia's counsel confirmed the defence would not be ready the next day, and Mr. Mullett's counsel replied with a warning that his client would seek default if no acceptable timeline was provided. On December 19, Acadia's counsel confirmed he was working expeditiously to have the defence served and filed as soon as possible, but Mr. Mullett's counsel proceeded to file the documents to obtain default judgment on the counterclaim with the Court at 3:43 p.m. Newfoundland time that same day. Acadia's counsel forwarded an unfiled copy of the defence to opposing counsel at 3:56 p.m. Ontario time, unaware that the default judgment application had already been submitted. The Court granted the default judgment on December 23, 2024, and Mr. Mullett's counsel provided Acadia's counsel with a copy of it on January 6, 2025.

Procedural irregularities in the default judgment application

The Court noted significant concerns with the document filed in support of the default judgment application. The document purported to be an affidavit but lacked a jurat and did not appear to have been sworn, contrary to Rule 48.01 of the Rules of the Supreme Court. Furthermore, Mr. Mullett's counsel stated in the supporting document that no communication had been received by his office that would indicate any intention to defend the counterclaim. Justice Handrigan found this assertion to be wrong, pointing to three specific emails that counsel for Acadia sent to counsel for Michael Mullett on December 18 and 19, 2024, which demonstrated that Acadia's counsel had taken instructions from his client to defend the counterclaim, that he was working diligently on drafting the defence, and that he intended to file it forthwith.

The legal framework and the Court's analysis

Acadia filed an interlocutory application on March 4, 2025, seeking to set aside the default judgment under Rule 16.06 and to strike the defence and counterclaim under Rule 29.10(a). The Court applied the three-factor test from Langor v. Spurrell for setting aside a default judgment: the potential merits of the defence, the explanation for failing to file the defence in time, and the timeliness of the application to set aside the judgment. Justice Handrigan found that Acadia's counsel acted reasonably in the circumstances and that his delay was excusable. The Court characterized Mr. Mullett's counsel's approach as rigid and formalized, noting that he did not act reasonably and that Acadia's delay in filing its defence, which was entirely reasonable in the circumstances, should not be held against it.

On the question of striking the counterclaim, the Court applied principles from Loder v. Loder and Central Computer Services Ltd. v. Green Acres Memorial Gardens, finding that Michael Mullett's counterclaim bore no relationship whatever to Acadia's statement of claim, could not be conveniently disposed of in the original proceeding, and would prejudice, embarrass, and delay the main action. Drawing a parallel to Bank of Montreal v. H.O. House Ltd., where a tort counterclaim was ordered to be a separate action from a contract claim, the Court noted a more significant difference: H.O. House Ltd. was the true defendant counterclaiming in that case, while Michael Mullett is not the true defendant here.

The ruling and overall outcome

Justice Handrigan allowed Acadia's application in its entirety. The default judgment on the counterclaim entered on December 23, 2024, was set aside; Mr. Mullett's defence to the main claim and his counterclaim, both filed on November 26, 2024, were struck from further consideration. The Court found that Mr. Mullett was not a party to the proceedings, had no standing to file pleadings, and that his defence was blocking Acadia from moving forward to prosecute its claim against the true Michael Mullett and Wade Mercer. Mr. Mullett was ordered to pay Acadia's costs of the application, to be taxed under Column 3 of the Scale of Costs. The Court noted that it was unclear as to the merits of Mr. Mullett's counterclaim, but observed that if he chose to go forward with his grievances in a separate cause, he would be no more prejudiced than if he had chosen that route in the first instance. No exact monetary amount beyond the costs order was determined, as the costs are subject to the taxation process.