The Plaintiffs sued the Defendants for deficiencies following the renovation of the Plaintiffs’ home. The Statement of Defence of the individual Defendant, Mr. Gibeault, was struck for a failure to serve an Affidavit of Records, and that of Improvisions Inc. for failure to produce documents. The Defendants were noted in default pursuant to Rule 3.36 and the Plaintiffs obtained Default Judgments pursuant to Rule 3.37. The Defendants brought an Application to set aside the Default Judgments and Noting in Default, and to permit the Statements of Defence to be filed pursuant to Rule 9.15(3). Justice Greckol referred to Rule 1.3, which gives the Court the power and discretion to provide various remedies.

The Defendants argued that they were unaware of procedural failings by their prior counsel and contended that they had meritorious defences. The Defendants attested to the fact that they were not made aware of the Plaintiff’s Applications to strike, the Orders requiring that certain steps be taken, and the Noting in Default. The Plaintiffs argued that, because the Defendants were represented by counsel at all times, they were deemed to have notice of all that occurred. The Plaintiffs argued in the alternative that the Court should grant a Security for Costs Order under Rule 9.15 (and Rule 4.22) in the event the Defendants were successful in their Application.

Greckol J. stated that the test to set aside a Noting in Default is different than setting aside a Default Judgment. To set aside a Noting in Default, a meritorious defence must be shown. To set aside a Default Judgment, the Applicant must demonstrate a higher threshold than that there is an arguable defence. Upon review of the responses to the allegations contained in the Statement of Claim, the Court held that the Defendants demonstrated they had arguable defences. Greckol J. considered the purposes of the Rules, as set out in Rule 1.2, in balancing the parties’ interests in order to reach the ultimate decision. Greckol J. was of the view that the Defendants did not deliberately allow the defaults to occur and had a credible excuse in that their former counsel failed to advise them of the proceedings and take necessary steps to defend. The Defendants did not learn of the procedural deficiencies until they changed counsel. As such, the Default Judgment was set aside. For the same reasons, the Noting in Default was set aside and the Defendants were permitted to file their Statements of Defence.