The Appellant and Respondents were joint venture partners in the development of three jointly owned properties. The Respondents sought and were granted relief by Originating Application. In the Originating Application hearing, which the Appellant attended, leave was granted to file a Statement of Claim for further relief and damages. A Statement of Claim was delivered by courier, but the delivery receipt included only a horizontal line above the recipient signature line. The Appellant was also sent a copy of the Statement of Claim by email.

The Respondents obtained a Noting in Default against the Appellant, based in part an Affidavit of Service exhibiting the deficient delivery receipt. The Noting in Default was sent to the Appellant by email. The Respondents served a Garnishee Summons against the Appellant’s employer in respect of the previous Originating Application but took no steps further to the Noting in Default for over two years. In 2022, the Respondents filed an Application for Default Judgment, pursuant to Rule 3.36. The Appellant then cross-applied to set aside the Noting in Default, pursuant to Rule 9.15.

The Court held that there are two tests for setting aside a Noting in Default and Default Judgment pursuant to Rule 9.15: (1) where there is a non-trivial flaw in the process preceding the Noting in Default or Default Judgment, the Defendant, acting promptly, has a right to have the Noting in Default or Default Judgment set aside; and (2) where the process preceding the Noting in Default or Default Judgment is regular, the Noting in Default or Default Judgment may be set aside in light of the availability of an arguable defence, absence of intent to allow Judgment to go by default, availability of a reasonable excuse for failing to defend, and prompt action by the party seeking to set aside once the Noting in Default is known.

The Court found that service of the Statement of Claim was ineffective since the courier receipt was insufficient to confirm personal service on the Appellant. The personal service requirement for commencement documents, pursuant to Rule 11.5, was not satisfied. The earliest evidence of the Statement of Claim being brought to the Appellant’s attention was the Respondents’ email attaching the Statement of Claim. The email was sent fewer than 20 days from the date of the Noting in Default, contrary to Rule 3.36. Accordingly, there was a non-trivial flaw, engaging the first above-noted category.

The Court went on to consider whether the Appellant had acted sufficiently promptly to avail of his right to set aside the Noting in Default. The Court distinguished the facts of Anstar Enterprises Ltd v Transamerica Life Canada, 2009 ABCA 196 (“Anstar”), which similarly involved a lengthy delay by the party seeking Default Judgment. Unlike in that case, the Court found that the Respondents had obtained a Noting in Default promptly, waiting only to seek Default Judgment. Further, unlike in Anstar, the filing of the Application for Default Judgment was within the three-year drop-dead rule prescribed by Rule 4.33.

The Court noted that in the case before it, the Respondents had good reason to delay seeking Default Judgment until their losses had fully crystallized. Meanwhile, the Respondents gave the Appellant actual notice of the Noting in Default, which the Appellant ignored for over two years. Noting the duty on litigants to act with reasonable dispatch, as reflected in Rule 1.2, the Court held the Appellant had not acted promptly.

Last, the Court applied an overall fairness review, as prescribed in SFM v MRM, 2020 ABQB 302, comparing the relative prejudice to each party that would result from granting or not granting the Appeal. The Court noted the Appellant’s failure to act after having been made aware of the Noting in Default and other procedural steps, despite having attended Court previously and having had the means and opportunity to obtain legal advice. The Court also noted substantial steps taken by the Respondents to deal with the circumstances described in the Statement of Claim, including reasonable mitigative efforts. The Court concluded that fairness considerations dictated that the Appeal should be refused.

In the result, the Appeal was refused and the Default Judgment, upheld.