Executive Summary: Key Legal and Evidentiary Issues

• Timeliness and propriety of a self-represented defendant’s motion to set aside a noting in default in a mortgage enforcement action.
• Adequacy and legal sufficiency of the defendant’s proposed “defence,” which consisted mainly of offers to refinance for less than the outstanding mortgage debt.
• Application of the Franchetti v. Huggins factors, including conduct of the parties, delay, prejudice, and the requirement (in rare cases) of an arguable defence on the merits.
• Determination that the plaintiff was under no legal obligation to accept a discounted payoff of the mortgage or settlement proposals below the debt claimed.
• Consideration of prejudice to the mortgagee if default were set aside, including prior extension of the mortgage term and alleged missed payments during the extension period.
• Balancing of procedural fairness against efficiency, with the court refusing to set aside default where doing so would only add delay, costs, and a meritless defence.

Facts of the mortgage dispute

This case arises from a mortgage enforcement action brought by plaintiff Jerry Steven Oltean against defendants Deborah Mitchell and Troy Anthony Greg. The plaintiff commenced the action by issuing a Statement of Claim on January 16, 2026, seeking enforcement of a mortgage registered in the Land Titles Division of Rainy River (No. 48). The mortgage was registered against lands owned by Ms. Mitchell and Mr. Greg. The claim alleges that the mortgage matured on October 6, 2025. At maturity, the principal amount said to be owing under the mortgage was $230,000. In addition to principal, the Statement of Claim includes amounts for alleged missed payments, a renewal fee, and NSF charges, bringing the total amount claimed due to $252,180. The plaintiff had already extended the mortgage once for a one-year period, during which the defendants allegedly missed several mortgage payments. Following issuance of the claim, the plaintiff served Ms. Mitchell on February 10, 2026, and Mr. Gregg on February 21, 2026. The defendants were required to deliver a statement of defence by March 13, 2026, absent the service of any notice of intent to defend. Ms. Mitchell, who was self-represented, attempted to file a defence within the required time. However, court staff rejected her filing due to formatting errors. The document she tried to file was not initially part of the motion record, but a copy was produced before the judge during the hearing of the motion. On March 12, 2026, Ms. Mitchell contacted counsel for the plaintiff to advise that she had attempted to file a defence and that it had been rejected. She did not, however, provide counsel with a copy of her proposed defence or otherwise disclose the substance of her intended response to the claim at that time. On March 16, 2026, with no properly filed defence and no notice of intent to defend, the plaintiff noted both Ms. Mitchell and Mr. Gregg in default. Mr. Gregg took no steps to defend the action and did not participate in the motion.

The motion to set aside default

Ms. Mitchell brought a motion to set aside the noting in default and for an extension of time to file her statement of defence. She was the moving party on the motion, while the plaintiff responded and opposed the relief sought. No one appeared for Mr. Gregg and the plaintiff’s actions regarding him were not challenged. The motion was heard by Zoom on April 30, 2026, before Fitzpatrick J. The record established that Ms. Mitchell moved promptly after being noted in default; there was no significant delay in bringing her motion. The court accepted that, from a timing standpoint, she acted appropriately in seeking to have the default set aside. The focus of the court’s analysis became twofold: first, the parties’ conduct around the default and any prejudice that might flow from setting it aside; and second, the strength, if any, of the defence that Ms. Mitchell proposed to advance.

Legal framework for setting aside a noting in default

In dealing with the motion, the court applied the principles outlined by the Ontario Court of Appeal in Franchetti v. Huggins, 2022 ONCA 111. That appellate decision sets out a non-exhaustive list of factors that guide a court’s discretion to set aside a default. These factors include: the parties’ behaviour; the length and reasons for the defendant’s delay; the complexity and value of the claim; prejudice to a party relying on the default; the balance of prejudice between the parties; and whether the defendant has an arguable defence on the merits. The Court of Appeal has emphasized that if a defendant seeks to set aside default promptly, it will be rare for a court to insist on a detailed showing of a meritorious defence at that stage. However, those factors are not rigid rules, and the motion judge retains a broad discretion to weigh them in light of the circumstances of the particular case.

Analysis of the parties’ conduct and prejudice

The court distinguished between the conduct of Ms. Mitchell and that of Mr. Gregg. The latter had done nothing to defend the claim, and the status of his noting in default was not seriously contested on the motion. As to Ms. Mitchell, the court accepted that she acted within the prescribed timelines to try to file a defence and then to move to set aside the default. Her delay was not the problem. Instead, the judge focused on her failure to provide a copy of her proposed defence to plaintiff’s counsel when she reached out on March 12, 2026, to report the rejection of her filing. The court considered it inappropriate that Ms. Mitchell did not share the substance of her defence with opposing counsel at that stage, effectively leaving the plaintiff “in the dark.” In the absence of any defence materials or formal notice of intent to defend, the plaintiff was entitled to proceed with noting the defendants in default. The judge concluded that the plaintiff had acted appropriately in moving to note both defendants in default once the deadline had passed with no properly filed defence. In terms of prejudice, the court noted that the plaintiff had already extended the mortgage for one year and that the defendants allegedly missed several payments during that extension. The mortgage debt had grown to a substantial amount. From the court’s perspective, reopening the default and permitting a meritless defence would prejudice the mortgagee by adding delay, costs, and procedural steps without any legitimate legal purpose. Ms. Mitchell, on the other hand, was found to be in no worse position than she had been when first served with the claim—she had no valid defence then, and she had none now.

The nature and sufficiency of the proposed defence

Central to the court’s decision was the content of the “defence” Ms. Mitchell had attempted to file. The document was rejected by the registrar for formatting reasons, and the judge agreed that court staff acted properly in refusing to accept it. More importantly, the substance of the document did not disclose any arguable defence on the merits. Rather than set out specific denials, legal grounds, or factual disputes concerning the mortgage debt, Ms. Mitchell’s document primarily detailed a series of offers she had made to refinance or pay out the mortgage for amounts that were significantly lower than the outstanding debt set out in the Statement of Claim. The court characterized this as a proposal for a negotiated discount, not a legal defence. In the judge’s view, the material filed by Ms. Mitchell did not assert any legal basis on which the plaintiff could be compelled to accept less than the amount due and owing under the mortgage. The fact that Ms. Mitchell was unable to secure alternative financing sufficient to cover the full mortgage debt, and that her offers fell below the amount claimed, led the court to infer that the property value might not support the debt level that had accrued. That reality, however, did not give rise to a defence. The court concluded that Ms. Mitchell was effectively seeking a negotiated or equitable outcome—paying less than the debt she had undertaken—but that wish did not create rights against the mortgagee or any legal obligation on the plaintiff to compromise the debt.

Rare insistence on a defence on the merits

Ordinarily, under Franchetti v. Huggins, a prompt request to set aside default might be granted even without a strong demonstration of a meritorious defence. Here, the judge considered the case to be one of the “rare” exceptions where it was appropriate to scrutinize the merits of the proposed defence closely. The judge reasoned that to set aside the default and allow Ms. Mitchell to file a purported defence that was “completely without merit” would achieve nothing except greater delay and higher costs for both sides. It would also place unnecessary strain on the court system by leading almost inevitably to further motions—such as a summary judgment motion—over a case that presented no real legal controversy about the debt. The Rules of Civil Procedure require that civil proceedings be resolved in a just, most expeditious, and least expensive manner on their merits. In the court’s view, permitting Ms. Mitchell to “reformat” and refile a meritless defence would run contrary to those objectives. It would simply prolong litigation that had a predictable outcome, without any legitimate benefit.

Outcome and monetary consequences

For these reasons, the court declined to exercise its discretion to set aside the noting in default against Ms. Mitchell. The motion was dismissed. The plaintiff is entitled to proceed to have the registrar sign judgment against both Ms. Mitchell and Mr. Gregg in the mortgage enforcement action. While the Statement of Claim alleges that $252,180 is outstanding under the mortgage (including principal, missed payments, a renewal fee, and NSF fees), the endorsement does not expressly state the precise final quantum of the default judgment that will be entered by the registrar, so the exact total amount of the monetary judgment cannot be definitively determined from this decision alone. The court did, however, fix the costs of the motion itself in the amount of $500, payable by the defendants jointly and severally to the plaintiff. Accordingly, the successful party in this motion and in advancing toward default judgment is the plaintiff, Jerry Steven Oltean, with a clearly quantified costs award of $500 on the motion and a default judgment to be entered for the mortgage debt in an amount that is not precisely specified in this endorsement.