On November 8, 2021, the Federal Court of Canada (the Court) in Toronto Regional Real Estate Board v R E Stats Inc. (ReDatum), 2021 FC 1193, granted a motion by the defendants, R E Stats Inc. (operating as ReDatum) and Gabriel Stefanescu, to set aside the Order granting the plaintiff, the Toronto Regional Real Estate Board (the TRREB), default judgment for copyright infringement relating to the TRREB Multiple Listing Service (the TRREB MLS® System).
In June 2021, the TRREB brought an ex parte motion for default judgment, as directed by the Court. The TRREB did not notify the defendants, and the Court did not send its correspondence to the defendants given that the defendants were in default. The Court granted the TRREB’s motion for default judgment, granting a permanent injunction and awarding $50,000 in damages for the infringement, as previously reported by the E-TIPS® newsletter here.
To be successful on its motion to set aside the default judgment, the defendants had to satisfy the Court that it had (1) a reasonable explanation for failing to file a Statement of Defence; (2) a prima facie defence on the merits to the plaintiff’s claim; and (3) moved promptly to set aside the default judgment.
On the first part of the test, the Court determined that the defendants had provided some basis, “albeit a weak basis”, for the delay in not filing a Statement of Defence. The Court held that the TRREB’s previous failed injunction application (2021 FC 30), a decision of the Federal Court of Appeal (TREB v Commissioner of Competition, 2017 FCA 236) holding that the MLS® System does not have valid copyright protection, and the lack of any reply by the TRREB to the defendants’ request for an update, provided a reasonable basis for the defendants to assume that the TRREB was not actively pursuing the action.
For the second factor, the Court noted that the Federal Court of Appeal decision in TREB v Commissioner of Competition raised a serious concern about the merits of the TRREB’s claim, and therefore a prima facie defence had been raised. For the final factor, the Court held that, based on the evidence, there was “no question that the Defendants acted expediently” in bringing its motion to set aside the default judgment.
In setting aside the default judgment, Justice Manson also noted that “this decision in no way condones or accepts the failure of the Defendants to file a defence in a timely manner, pursuant to the Rules of this Court.”
Summary By: Michelle Noonan
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