2036576 ALBERTA LTD v DHINDSA

The Plaintiff sued several Defendants involved in a residential infill project after a duplex was demolished because it was built too close to the property line. MR Engineering was one of the Defendants, although the scope of its role in the project was disputed. MR Engineering did not file a Statement of Defence after service, and the Plaintiff obtained Default Judgment under Rule 3.37. MR Engineering applied to set aside both the Noting in Default and the Judgment after its sole shareholder and director said he first learned of the Judgment on returning to Canada.

The Plaintiff argued that the Judgment under Rule 3.37 was more akin to Summary Judgment than Default Judgment because proof of the Claim was still required. Justice Angotti rejected that argument. The Court held that Judgment under Rule 3.37 remained a Default Judgment because it arose from the Defendant’s failure to file a Defence, even though the Plaintiff was still required to prove its Claim. The Court also held that, although MR Engineering’s Application was poorly drafted, it did seek to set aside the Noting in Default as well as the Judgment because it asked for permission to file a Defence.

Applying Rule 9.15, the Court considered whether MR Engineering had an arguable defence, a reasonably excusable lack of intention to allow default, and whether it had moved promptly to set aside the Judgment. Justice Angotti held that MR Engineering had an arguable defence and had not deliberately allowed Judgment to go by default. Although Justice Angotti found that MR Engineering had not moved promptly to set aside the Judgment, there was a real possibility that MR Engineering might not be liable, or might only be partly liable, and any prejudice to the Plaintiff could be addressed through costs and strict terms.

Justice Angotti determined that relief was required in the circumstances and set aside the Noting in Default and the Default Judgment, subject to strict conditions, including delivery of an unfiled Statement of Defence and payment of costs within fixed timelines.