2114223 ALBERTA LTD v LOUGHEED

The Plaintiffs appealed a decision of an Applications Judge dismissing the Action for long delay and setting aside Default Judgment pursuant to Rules 4.33 and 9.15, respectively.

The Plaintiffs commenced the Action on January 17, 2012. The Defendant attended Questioning for Discovery in October 2015, after which, counsel for Defendant withdrew from representation pursuant to Rule 2.29. The Defendant did not attend Questioning on October 1, 2020, after the Plaintiffs served a Notice of Appointment for Questioning on the Defendant’s current home address. On March 1, 2021, the Statement of Defence was struck out, despite the Defendant not being held in contempt (“Striking Out Order”). On October 16, 2024, the Plaintiffs successfully applied for Default Judgment against the Defendant without notice pursuant to Rule 3.37. The Defendant purportedly learned about the Default Judgment on February 20, 2025, and retained counsel to file the subject Application.

On Appeal, the Court noted that the standard of review for an appeal of a decision of an Applications Judge was correctness. On the issue of long delay, Mah J. found in favour of the Plaintiffs and held that the Applications Judge erred by treating the Striking Out Order as the last significant step in the Action and failing to account for the Default Judgment. Accordingly, Justice Mah found that three-year period for long delay under Rule 4.33 had not yet expired.

Regarding the second issue of setting aside Default Judgment, the Court applied the three-part common law test under Rule 9.15, namely whether the Applicant: (1) had an arguable defence; (2) had not deliberately let the Judgment go by default, and had some excuse for the Default Judgment; and (3) moved promptly to open the Default Judgment up after first learning about it. Justice Mah considered a variety of sub-issues including: the impact of a recent case, Liberty Mortgage Services Ltd. v River Valley Development Corp., 2025 ABCA 346; how the Striking Out Order, as a contempt remedy pursuant to Rule 10.53, was granted despite no finding of contempt; whether the Defendant had satisfied the three-part test; and whether setting aside the Applications Judge’s Order to set aside the Default Judgment would have any practical meaning, given the Striking Out Order. Mah J. found in favour of the Defendant, in-part on the basis that the three-part test was satisfied and that the circumstances leading to the Striking Out Order worked against the Defendant.

The Court allowed the Appeal, in part. It overturned the dismissal of the Action for long delay under Rule 4.33, but confirmed the Order setting aside the Default Judgment under Rule 9.15. Justice Mah also permitted the Defendant to apply, within 45 days of this Appeal Decision, to set aside the Striking Out Order. If the Defendant would fail to do so, the Plaintiff could reapply for Default Judgment.