The Applicants, Las Palmas Estate Homes Ltd. and Ryan Thomas, applied to set aside a Default Judgment obtained by the Respondents, Jamie Yehya and Jaled Yehya.

Manderscheid J. confirmed that Rule 9.15(3) empowers the Court to permit a Statement of Defence to be filed by a party who has been noted in default, and to set aside a Default Judgment. Manderscheid J. also confirmed that the test for setting aside a Default Judgment is as set out in Palin v Duxbury, 2010 ABQB 833 (CanLII): the Defendants must show that: a) they have an arguable defence; and b) they did not deliberately let the Judgment go by default, and they have some excuse for the default, such as illness or a solicitor’s inadvertence; and c) after learning of the Default Judgment, they moved promptly to set it aside.

Manderscheid J. considered the facts and dismissed the Application on the basis that the Applicants had not shown that they had an arguable defence to the claim of fraudulent misrepresentation against them and they were simply relying on the bare assertion that the claim would be difficult to prove. Moreover, the Court did not accept the Applicants’ ongoing bankruptcy proceedings as a reasonable excuse for the delay in filing a Defence. Finally, Manderscheid J. rejected the Applicants’ argument that the period of delay should be calculated from the date that the Applicants realized the Respondents were seeking to personally enforce the Default Judgment to the time when the Applicants applied to set aside the Default Judgment. Justice Manderscheid clarified that, according to the Rules, the delay period is calculated from the time the Applicants became aware of the Default Judgment to the time they applied to set it aside. Even applying a liberal construction to this requirement, the delay period was in excess of 9 months, which indicated the Applicants had not moved promptly as required.

Justice Manderscheid determined that, in the circumstances the interests of justice and fairness favoured leaving the Default Judgment intact. The Application to set aside the Default Judgment was dismissed.