SAMPLE STATEMENT OF DEFENCE, COUNTERCLAIM AND CROSSCLAIM
Court File No: Year 0-CU-3785
SUPERIOR COURT OF JUSTICE
- and -
FRIENDLY BANK, WILLIAM BROWN,
SOLO SOAP INC. and TOM SOLOMON
SOLO SOAP INC.
- and -
WILLIAM HOWARD, KEN HOWARD,
HOWARD SOAPCO LTD. and
HOW-WILL MANUFACTURING CO. LTD.
STATEMENT OF DEFENCE AND CROSSCLAIM
OF THE DEFENDANTS SOLO SOAP INC. AND TOM SOLOMON
AND COUNTERCLAIM OF THE DEFENDANT SOLO SOAP INC.
TO THE DEFENDANTS TO THE COUNTERCLAIM:
A LEGAL PROCEEDING has been commenced against you by way of
a counterclaim in an action in this court. The claim against you is set out in the following
IF YOU WISH TO DEFEND THIS COUNTERCLAIM, you or an
Ontario lawyer acting for you must prepare a defence to counterclaim in Form 27C
prescribed by the Rules of Civil Procedure, serve it on the plaintiff by counterclaim's
lawyer or, where the plaintiff by counterclaim does not have a lawyer, serve it on the
plaintiff by counterclaim, and file it, with proof of service, in this court, WITHIN
TWENTY DAYS after this statement of defence, crossclaim and counterclaim is served
If you are not already a party to the main action and you are served in
another province or territory of Canada or in the United States of America, the period for
serving and filing your defence is forty days. If you are served outside Canada and the
United States of America, the period is sixty days.
If you are not already a party to the main action, instead of serving and
filing a defence to counterclaim, you may serve and file a notice of intent to defendant in
Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more
days within which to serve and file your defence to counterclaim.
IF YOU FAIL TO DEFEND THIS COUNTERCLAIM, JUDGMENT
MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT
FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS
PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY
BE AVAILABLE TO YOU BY CONTACTING A LEGAL AID OFFICE.
Date: 29 August, year 0
Issued by ______________________________
Address of Court Office:
1 King Street West
TO: KEN HOWARD
HOW-WILL MANUFACTURING CO. LTD.
3221 Homey Blvd.
AND TO: R.T. HARDY
Barrister and Solicitor
66 King St. W.
Solicitor for the plaintiff
1. The defendants Solo Soap Inc. ("Solo") and Tom Solomon ("Solomon")
(sometimes together referred to as "these defendants") admit the facts alleged in
paragraphs 3, 4 and 19 of the statement of claim.
2. These defendants deny the allegations contained in paragraphs 5, 6, 9, 11, 12,
13, 14, 15, 16, 17, 18, 20 and 21 of the statement of claim.
3. These defendants have no knowledge of the allegations contained in
paragraphs 2, 7, 8 and 10 of the statement of claim.
4. Solomon is the beneficial owner of Solo.
5. These defendants deny that the equipment claimed by the plaintiff in this
proceeding (the "Disputed Equipment") is owned by the plaintiff. The Disputed
Equipment was purchased by and is now owned by Solo, as described below.
6. In year -7, the plaintiff's brother, Ken Howard, as the owner of the
Disputed Equipment, granted achattel mortgage on the Disputed Equipment.
7. In year -5, Ken Howard transferred ownership of the Disputed Equipment to
Howard Soapco Ltd. ("Soapco"). Soapco had previously granted to the Friendly Bank a
fixed and floating charge debenture, to which the Disputed Equipment became subject
upon its transfer to Soapco. In or about April, year -3, Soapco defaulted on its loan from
the Friendly Bank, thereby crystallizing the Bank's security on the Disputed Equipment.
8. The Disputed Equipment was owned by Soapco up until 15 July, year 0. Prior
to the transfer to Soapco, the Disputed Equipment was owned by Ken Howard.
9. At all material times prior to 15 July, year 0, the Disputed Equipment was
used in the soap manufacturing business operated by Ken Howard and Soapco at 15
Cleanway Road, Mississauga, Ontario.
10. Long before 15 July, year 0, the plaintiff knew that the Disputed Equipment
had been pledged as security by Ken Howard personally and by Soapco. The plaintiff
also knew that the Friendly Bank regarded the Disputed Equipment as part of its security.
11. At no time before the commencement of these proceedings did the plaintiff
notify the Friendly Bank or anyone else that he claimed ownership of the Disputed
12. In reliance upon, among other things, the apparent and actual ownership of the
Disputed Equipment by Soapco, the Friendly Bank deferred from time to time the
realization of its security, even though there had been default under the loan granted by it
13. In further reliance upon the ownership by Soapco of the Disputed Equipment,
and in the exercise of its powers under the debenture, on 23 June, year 0 the Friendly
Bank entered into an agreement (the "Sale Agreement") to sell, among other things, the
Disputed Equipment to Solo. The Sale Agreement also provided for the sale by the
Friendly Bank as mortgagee to Solo as purchaser of the premises (the "Premises")
formerly occupied by Soapco at 15 Cleanway Road.
14. The Sale Agreement with respect to the Disputed Equipment was completed
on 15 July, year 0. On that date, Friendly Bank delivered to Solo an executed bill of sale
(the "Bill of Sale") in relation to the Disputed Equipment. As a result of this transaction,
Solo became the owner of the Disputed Equipment and the Premises. On the same date
the Friendly Bank put Solo into possession of the Disputed Equipment and the Premises.
15. In reliance upon the belief that the Disputed Equipment was owned by Soapco
and was the subject of the debenture in favour of the Friendly Bank, Solo proceeded to
complete the transaction of purchase and sale. But for such belief, Solo would not have
completed the transaction, nor paid any consideration.
16. If, as the plaintiff asserts, he is the owner of the Disputed Equipment, which is
not admitted but denied, these defendants plead that the plaintiff is estopped from now
asserting such claim for ownership.
17. These defendants therefore submit that this action should be dismissed as
against them, with costs.
18. Solo claims against the defendants Friendly Bank and William Brown
(a) damages in the amount of $350,000; and
(b) prejudgment interest on the amount referred to in subparagraph 18(a) pursuant
to section 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
19. Solo and Solomon claim against the defendants Friendly Bank and Brown:
(a) indemnity or contribution in respect of all sums they may be called upon to
pay to the plaintiff;
(b) their costs of defending the main action on a substantial indemnity scale; and
(c) their costs of this crossclaim.
20. These defendants repeat and rely on the allegations made in paragraphs 4-16
of their statement of defence.
21. The Sale Agreement between Solo and Friendly Bank provided that the
purchase price was to include, among other things, the Disputed Equipment. On closing
the Friendly Bank delivered to Solo a Bill of Sale in relation to the Disputed Equipment.
22. In the Bill of Sale, the Friendly Bank as seller promised and agreed with Solo
as buyer, that:
(a) the seller was rightfully and absolutely possessed of and entitled to the
(b) the seller had good right to assign the Disputed Equipment to the buyer;
(c) the buyer was thereafter to have quiet possession of the Disputed Equipment
without any manner of hindrance, interruption, molestation, claim or demand
whatsoever of any person;
(d) the Disputed Equipment was free and clear from all encumbrances; and
(e) the buyer was to be released and discharged at the cost of the seller from all
former and other bargains, sales, gifts, grants, charges and encumbrances
affecting the Disputed Equipment and the seller agreed to indemnify the
23. After the closing of the purchase transaction on 15 July, year 0 and at a time
unknown to Solo, the plaintiff, Ken Howard, and representatives of Soapco attended on
the Premises, without permission from the new owner, Solo. Such attendance was
purportedly authorized by a lease dated 2 December, year -2 (the "Lease") between
Soapco and How - Will Manufacturing Co. Ltd. ("How - Will"), a corporation controlled
by the plaintiff and Ken Howard.
24. In other proceedings pending before this Honourable Court, it is asserted by
How - Will that the Lease was expressly authorized by Brown on behalf of the Friendly
Bank and further that pursuant to the Lease, How - Will was entitled to thirty days'
notice of termination before it could be required to vacate the Premises.
25. During the course of their attendance at the Premises, the plaintiff, Ken
Howard and other representatives of Soapco removed a variety of items of equipment
(the "Missing Equipment") owned by Solo. The Missing Equipment is listed in detail on
Schedule "A" hereto and, in part, form part of the Disputed Equipment.
26. In this action, Solo obtained an interlocutory mandatory order with respect to
the return of the Missing Equipment, but to date has not recovered all of the Missing
27. If, as is asserted by How - Will, it had a valid lease which had the approval of
the Friendly Bank, which is not admitted but denied, then the Friendly Bank and Brown
are responsible for causing, permitting or enabling the trespass on the Premises which
resulted in the removal of the Missing Equipment.
28. By reason of the commencement of these proceedings, the injunctive relief
sought and obtained by the plaintiff and the removal of the Missing Equipment, Solo has
been unable to operate the soap manufacturing business located at the Premises. As a
result, Solo has suffered considerable damages.
29. If, as the plaintiff asserts, he is the owner of the Disputed Equipment, which is
not admitted but denied, the Friendly Bank is in breach of its covenants contained in the
Bill of Sale and is liable to Solo for all loss and damages suffered by it by reason of such
30. Solo claims as against the defendants to the counterclaim:
(a) a declaration that it is the owner and entitled to possession of the Missing
Equipment described in Schedule “A”;
(b) a declaration that it is the owner of the Disputed Equipment;
(c) a mandatory order requiring the defendants to the counterclaim to deliver the
(d) general damages in the amount of $100,000;
(e) punitive damages in the amount of $50,000;
(f) prejudgment interest on the amount referred to in subparagraph 30(d) pursuant
to section 128 of the Courts of Justice Act, R.S.O. 1990, c. C-43; and
(g) its costs of this counterclaim.
31. Solo repeats and relies upon the allegations contained in paragraphs 4-16 of
the statement of defence and the crossclaim.
32. The defendant to the counterclaim, Ken Howard, is the brother of the plaintiff
33. Ken Howard is the President and beneficial owner of the defendant to the
counterclaim Soapco. Soapco formerly carried on business as a manufacturer of soap
products in Mississauga, Ontario.
34. The defendant to the counterclaim, How - Will, is a corporation that carries
on business as a manufacturer of giftware in Mississauga, Ontario.
35. At a time or times unknown to Solo, the defendants to the counterclaim or
their representatives entered upon the Premises and removed the Missing Equipment
described in Schedule “A”. Solo is the owner of the Missing Equipment.
36. As a result of the removal of the Missing Equipment, Solo has suffered
DATE: 29 August, year 0
TOWER & OVER
Barristers and Solicitors
101 Montreal Road
Mark Peterson LSUC #37426
tel.: (613) 391-4888
fax: (613) 392-4414
Solicitors for the defendants Solo Soap
Inc. and Tom Solomon and the plaintiff
by counterclaim Solo Soap Inc.
[standard form backsheet as per Form 4C]