What is a Default Judgment?

A default judgment is often granted in favour of a plaintiff when the defendant, although served, either fails to appear in court or respond to a claim within the predetermined time limit.

Can a Party Successfully Have it Set Aside?

Setting aside a default judgment is a discretionary remedy based on facts and circumstances. Once granted, the defendant must seek to set aside the judgment before the appropriate motions judge. A recent case provides a good illustration of the treatment such motions often receive in Ontario courtrooms. The plaintiff in the case had been successful in obtaining default judgment against the defendant. The defendant then successfully brought a motion to set the judgment aside. The plaintiff appealed, asking the Ontario Court of Appeal (ONCA) to reinstate the default judgment. The ONCA’s decision (discussed below) demonstrates the appropriate treatment given to such matters by judges in Ontario.

Five Factors to Consider in a Motion to Set Aside a Default Judgment

The 2014 decision of the Ontario Court of Appeal (ONCA) in Mountain View Farms Ltd. V. McQueen, sets out five major factors to consider when deciding on a motion to set aside a default judgment:

• whether the motion was brought promptly after the defendant learned of the default judgment;
• whether there is a plausible excuse or explanation for the defendant’s default in complying with the Rules;
• whether the facts establish that the defendant has an arguable defence on the merits.
• the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and
• the effect of any order the court might make on the overall integrity of the administration of justice.

The enumerated factors or tests are not rigid rules that must be followed slavishly. Rather, they must be considered in light of the particular circumstances of each case. This can mean that one factor alone can be used to set aside the default judgment which weighs heavily in favour of the defendant, even where other factors are not satisfied.

Alleged Errors In the Case at Hand

The factors of debate in the decision at hand dealt with the two errors suggested by the appellant as follows:

1. That the motions judge erred in concluding that the defendant had sufficiently explained their failure to act after receiving the notice of the motion for default judgment, and;
2. That the motions judge had erred in concluding that there was an arguable defence on the merits.

The Explanation for Default Rests on the Facts

The facts suggested that the defendant, although served with a motion for default judgment, did nothing thereafter on the basis that they did not understand the documents or that they were to respond or appear in court. This suggestion was accepted by the motions judge after a careful review of the evidence. This finding, the ONCA concluded was open for the motions judge to make. No authority to the contrary was put forward by the plaintiff.

Default Judgment is Not Equal to Summary Judgment

The plaintiff suggested that mere denials or assertions of the defendant were insufficient to establish an arguable defence on the merits. The plaintiff argued that the defendant should be called on to put their best foot forward to respond to the plaintiff’s expert evidence. The ONCA made it clear that to find with the plaintiff on this point would be an error, as a motion to set aside a default judgement is not the same as a summary judgment motion. The defence does not have to show that its defence(s) will eventually succeed, but only that they are arguable and have an air of reality about them.

Seek Advice From Experienced Litigation Counsel

Issues relating to litigation can become extremely complicated. It is always best to ensure that you have representation who can provide you or your business with experienced and knowledgable guidance through all aspects of the litigation process.

Contact Milosevic & Associates in Toronto for unparalleled representation in even the most complex corporate and commercial disputes. Over the years, our team of exceptional litigators has seen it all and has successfully fought for our clients’ rights. Our impressive track record speaks for itself.  Call us at 416-916-1387 or contact us online for a consultation.