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Civil Litigation Cases - Default Judgment - Setting Aside (3)

. Amex Bank of Canada v. DaCosta

In Amex Bank of Canada v. DaCosta (Ont CA, 2026) the Ontario Court of Appeal dismissed an appeal, this brought against the dismissal of the appellant's motion to set aside a default judgment:

[2] The motion judge recited the factors to be considered in deciding whether to aside a default judgment as approved by this court in Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, 119 O.R. (3d) 561, at paras. 48-49. She reminded herself that the factors are not treated as rigid rules but are to be employed in the service of the overarching question: whether it is just to relieve the defendant of the consequences of the default: Mountain View, at para. 50.

[3] According to the motion judge, all of the Mountain View factors, save one, counted against the appellant. She found that there was a lengthy and unexplained delay in bringing the motion after the appellant had become aware of the judgment—a delay of two years based on the respondent’s evidence of contact between its lawyers and the appellant, and of at least one year on the appellant’s own evidence. She did not accept that the appellant had proffered a plausible excuse for the default in defending the claim that led to the judgment being granted in the first place. She found he was aware of efforts to serve the claim and chose to believe that it did not involve him personally—circumstances she characterized as “willful blindness”. Moreover, she found that when the claim was served substitutionally it would have come to the appellant’s attention. She found the prejudice to both parties was monetary, but that the potential prejudice to the respondent in allowing the motion would be greater. And she found that in view of the length of the unexplained delay and the lack of a plausible excuse for the default, the “overall integrity of the administration of justice favours dismissal of the motion”.

[4] The motion judge did accept that the appellant raised a proposed defence with an air of reality by contending that he had signed the application for the credit card on behalf of a corporation and was told by a representative of the respondent that there would be no personal liability. She described the proposed defence as “weak” but noted that, under Mountain View, the merits factor aimed only at whether there was an air of reality to the proposed defence, not whether it would inevitably succeed. She held that while the existence of an arguable defence may justify setting aside a default judgment, this was not such a case, in light of the appellant’s significant delay in bringing the motion to set the judgment aside.

[5] A motion judge’s “decision to set aside a default judgment is a discretionary one that will attract deference on appeal. It should not be interfered with absent an error in law or principle, a palpable and overriding error of fact, or unless the decision is so clearly wrong as to amount to an injustice”: Mountain View, at para. 55.

[6] We are not satisfied that the appellant has demonstrated any basis for appellate interference.

. Ingarra v. Cartel & Bui LLP [default J]

In Ingarra v. Cartel & Bui LLP (Ont CA, 2026) the Ontario Court of Appeal considered whether a default judgment was final or interlocutory, and the appropriate review procedure for challenging default judgments:

[4] A default judgment is an interlocutory order: Add-Vance Service Centre Ltd. v. Triloq Corp., 2024 ONCA 940, at para. 6. As such, this court does not have jurisdiction to hear an appeal from such an order: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1). Moreover, the proper procedure for challenging a default judgment is to have it set aside under r. 19.08 of the Rules of Civil Procedure. A party subject to a default judgment is prohibited from taking another step in the action, other than a motion to set aside the noting of default or any judgment obtained by reason of the default, without leave of the court or the consent of the plaintiff: r. 19.02(1)(b).

. Fisher v. Soroka

In Fisher v. Soroka (Ont CA, 2022) the Court of Appeal considered delay as it feeds in the tests for both setting aside default judgment, and relief from forfeiture:

[4] The appellant’s first submission is that the motion judge applied the wrong legal analysis to the extent he used the test for setting aside a default judgment, rather than the analysis for granting relief against forfeiture. We disagree. The motion judge considered the legal analyses applicable to both setting aside a default judgment and granting relief against forfeiture. He cited leading authorities of this court regarding both issues. Both tests were relevant in the circumstances.

[5] In any event, a significant factor in both tests is whether the motion was brought promptly and the moving party’s explanation for the delay: Winters v. Hunking, 2017 ONCA 909, at paras. 12-14; Intact Insurance Co. v. Kisel, 2015 ONCA 205, 125 O.R. (3d) 365, at paras. 12-14; and Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, 119 O.R. (3d) 561, at paras. 47-50. We see no palpable and overriding error in the findings of the motion judge on the record before him that the motions to set aside were not made with reasonable promptness, and that the appellant’s explanation for the delay was neither plausible nor credible.

. Snell v. SUGI Financial Services Inc.

In Snell v. SUGI Financial Services Inc. (Div Ct, 2022) the Divisional Court found a misapplication of the legal test for setting aside a default judgment, but - on exercising their CJA 134(1)(a) powers - dismissed the appeal regardless:

[2] The Master correctly set out the test to be applied on a motion to set aside a default judgment, citing Peterbilt of Ontario Inc. v. 156627 Ontario Ltd. (2007), 2007 ONCA 333 (CanLII), 87 OR (3d) 479 (CA) and HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp., 2008 ONCA 894, and applying the framework used by D.M. Brown J. (as he then was) in Hanratty v. Woods, 2009 CanLII 43649 (Ont. SCJ):

(a) did the moving parties move forthwith to set aside the default judgment when it came to their attention?

(b) is there a valid explanation from the moving parties for their default?

(c) have the moving parties shown a triable defence to the claims?

(d) do the interests of justice favour setting aside the default judgment?

This is the correct test to apply, and the appellant does not take issue with it.

. Franchetti v. Huggins

In Franchetti v. Huggins (Ont CA, 2022) the Court of Appeal set out law regarding setting aside a noting in default:

The Governing Principles: Setting Aside a Noting of Default

[6] The Rules of Civil Procedure, R.R.O. 1990, Reg. 194 are meant to be taken seriously by plaintiffs and defendants. Under r. 1.04(1), the rules are to be “liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” Further, with respect to a failure to comply with the rules, the court, under r. 2.01(1)(a) “may grant all necessary…relief, on such terms as are just, to secure the just determination of the real matters in dispute”.

[7] Rules 18.01 and 18.02 oblige a defendant to respond with a statement of defence within 20-30 days of the date the defendant is served with the statement of claim. The consequences of failing to respond can be dire. Under r. 19.01, the claimant may have the defendant noted in default. A defendant noted in default under r. 19.02(1) “is deemed to admit the truth of all allegations of fact made under the statement of claim” and may not otherwise participate in the action, other than by bringing a motion to set aside the noting of default. The next dire consequence is that after noting the defendant in default, in certain circumstances the plaintiff may move for default judgment under r. 19.04.

[8] Under r. 19.03, a defendant noted in default may move to have the noting of default set aside, and this may be ordered “on such terms as are just.” In the context of an action that had been dismissed for delay, Weiler J.A. discussed several guiding principles that are also relevant to setting aside a noting of default: H.B. Fuller Company v. Rogers, 2015 ONCA 173, 386 D.L.R. (4th) 262, at paras. 25-29. These include the strong preference for deciding civil actions on their merits, the desire to construe rules and procedural orders non-technically and in a way that gets the parties to the real merits, and whether there is non-compensable prejudice to either party.

[9] There are many cases discussing the criteria for setting aside a noting of default. See particularly Laskin J.A.’s detailed exposition in Kisel, at para. 13. To summarize the jurisprudence, the following factors have been found to be relevant in considering whether a noting of default should be set aside:

(1) The parties’ behaviour;

(2) The length of the defendant’s delay;

(3) The reasons for the delay;

(4) The complexity and value of the claim;

(5) Whether setting aside the noting of default would prejudice a party relying on it;

(6) The balance of prejudice as between the parties; and

(7) Whether the defendant has an arguable defence on the merits.

[10] These factors are not exhaustive nor are they to be applied as rigid rules. An arguable defence on the merits may justify the court in exercising its discretion to set aside a default judgment, and for that purpose it is sufficient for the defence to have an “air of reality”: Mountain View Farms Ltd. v. McQueen, 2014 ONCA 194, 119 O.R. (3d) 561, at para. 51. However, perhaps because requests to set aside noting in default usually occur early in the litigation process, unlike this case, courts will rarely require a defendant who has been noted in default to show an arguable defence on the merits. In a case such as this one involving a significant delay, the moving party is required to show an arguable case on the merits.