UTAH v ZELISKO

This was an Appeal of an Applications Judge’s Decision to set aside a Noting in Default.

Mr. Utah, an Australian police informant whose identity was exposed in 2006, fled to Canada and sought refugee protection in 2007. A Canadian Border Services Agency (“CBSA”) officer failed to assess his eligibility, enter his claim, or forward it for review, and likewise did not process his subsequent permanent residency applications. As a result, Mr. Utah could not access refugee benefits until a new CBSA officer assumed responsibility in 2015 and directed him to file a new refugee claim. Mr. Utah did so and was granted protected person status in 2017.

Mr. Utah commenced a Federal Court Action against the CBSA officer and the Attorney General of Canada for misfeasance in public office and Charter breaches. While the Defendants’ Application for Summary Judgment on limitations grounds was initially dismissed, the Federal Court of Appeal allowed the Appeal and granted Summary Judgment, finding the claim out of time (the “FCA Decision”). In September 2022, Mr. Utah filed a new Statement of Claim in the Alberta Court of King’s Bench seeking over $37 million in damages and asserting that the two-year limitation period was suspended due to mental health related disability under Section 5 of the Limitations Act, RSA 2000, c L-12 (the “ABKB Claim”).

By October 13, 2023, Mr. Utah had served all Defendants and corresponded repeatedly with the Department of Justice (“DOJ”) counsel, who acknowledged service but did not respond to his inquiries regarding default or an extension to file a defence. After receiving no reply, Mr. Utah noted Canada in default under Rule 9.15(3) on November 14, 2023, and sought Default Judgment, which was rejected on procedural grounds. In December 2023, DOJ counsel apologized for the lack of communication, requested additional time to file a defence, and later applied to set aside the default when Mr. Utah refused consent. The Applications Judge granted Canada’s Application to set aside the Noting in Default, prompting this Appeal.

Before the Appeal was heard, Mr. Utah filed five additional Affidavits, raising the issue of whether new evidence could be admitted under Rule 6.14(3). Jugnauth J. emphasized that although the threshold for relevance and materiality is low, additional evidence must still relate directly to the Noting in Default. Justice Jugnauth rejected four of the Affidavits as conclusory, argumentative, or irrelevant, admitting only one Affidavit from a physician concerning Mr. Utah’s mental health related disability. Despite admitting the physician’s affidavit this, Jugnauth J. held that it did not affect whether Canada had an arguable defence, a reasonable excuse or acted promptly.

On Appeal, Mr. Utah argued that the Applications Judge erred by relying on unsworn evidence, concluding Canada had an arguable defence without factual basis, and accepting that Canada had a reasonable excuse and acted promptly under Rule 9.15(2). Canada contended that the Applications Judge correctly applied the governing test, relying on affidavits, the FCA Decision, and the pleadings to establish arguable defences, a reasonable excuse, and timely action.

Justice Jugnauth reiterated that under Rule 9.15(3)(a), the Court retains broad discretion to set aside a noting in default. Jugnauth J. reviewed the applicable test outlined in Palin v Duxbury, 2010 ABQB 833, which requires the applicant demonstrate an arguable defence, no intention to default and a reasonable excuse for doing so, and prompt action to cure the default. Justice Jugnauth confirmed that even if one element is not satisfied, the Court may still grant relief where fairness warrants it.

The Court held that at this stage Canada needed to establish only arguable, not proven, defences. Justice Jugnauth determined that prior decisions and the pleadings provided sufficient evidentiary grounding for Canada’s limitation, res judicata, and collateral-attack defences. Jugnauth J. accepted that Canada clearly intended to defend and initially had a reasonable basis for delay. However, Justice Jugnauth concluded that Canada ultimately lacked any reasonable excuse for missing the extended deadline, as Mr. Utah had given clear notice, followed up repeatedly, and as a self-represented litigant, owed no professional courtesy to warn of an impending default.

Nonetheless, Jugnauth J. found that Canada met the requirement of prompt action by attempting to file within the 20-day window under Rule 9.15(2), seeking consent to set aside the default, and acting promptly to correct filing issues. Consequently, Justice Jugnauth found it was open to the Applications Judge to set aside the default and extend time.

While Canada failed to satisfy a reasonable excuse, Justice Jugnauth exercised discretion under Rule 9.15(3) to uphold the Applications Judge’s Decision to set aside the default. Jugnauth J. emphasized the absence of prejudice to Mr. Utah, the significant prejudice to Canada if barred from raising substantive defences, and the public interest in avoiding duplicative or inconsistent litigation. Accordingly, the Appeal was dismissed, and Rule 9.4(2)(c) was invoked for preparation of the resulting Order.