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Small Claims - Default Proceedings. Gashaw v. Riddell
In Gashaw v. Riddell (Ont Div Ct, 2025) the Ontario Divisional Court allowed an appeal, this from a Small Claims Court order "dismissing the Appellant’s motion to set aside the noting in default".
Here the court considers R11.06 ['Setting Aside Noting of Default by Court on Motion'] of the Rules of the Small Claims Court, and the elements of that test:Issue #1- Did the Deputy Judge Consider and Apply Rule 11.06?
[26] As I have noted, the decision to set aside a default judgment is a discretionary decision. However, unlike the Superior Court (Rules of Civil Procedure, Rule 19.08), the Small Claims Court rules specifically articulate a test to be applied in making this discretionary decision.
[27] Rule 11.06 of the Small Claims Court Rules states:11.06 The court may set aside the noting in default or default judgment against a party and any step that has been taken to enforce the judgment, on such terms as are just, if the party makes a motion to set aside and the court is satisfied that,
(a) the party has a meritorious defence and a reasonable explanation for the default; and
(b) the motion is made as soon as is reasonably possible in all the circumstances. [28] The Deputy Judge was bound to apply this three-part test, failing which the order must be set aside: Coombs, para. 33. The reasons of the Deputy Judge, as set out at paragraph 18, fail to consider whether there is a meritorious defence, whether there was a reasonable explanation for the delay or whether the motion was made as soon as reasonably possible. It is an error in law to have failed to apply these three elements of the test and that error, on its own, justifies reversal of the decision.
[29] However, the Respondent in particular has made additional arguments in respect of each of the factors. He has done so arguing, inter alia, that it is permissible for the Respondent to raise any argument to sustain the judgment of the Court below: Maple Ridge Community Management Ltd. v. Peel Condominium Corp. 231, 2015 ONCA 520 at para. 38. In addition, section 134 of the Courts of Justice Act gives me the jurisdiction to make any order that the Court below ought to have made. Therefore, I will consider the factors.
Meritorious Defence
[30] I start with a consideration of the question of whether there is a meritorious defence in this case. This is a higher standard than the “arguable defence” that is used under Rule 19.08 in the Superior Court. Coombs, supra, Teliawala v. Sandhu, 2019 ONSC 2385, [2019] O.J. No. 1989 (Div. Ct.) at para. 9. I note that, it is not the “much higher” standard that the Respondent suggests in his factum.
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[37] I should briefly address the case-law on what is a reasonable period of delay. The Respondent points to the decision in Canadian Imperial Bank of Commerce v. Petten, 2010 ONSC 6726 as an example of a four-month delay being too long to be reasonable. The problem with this argument is that each case turns on its own facts, and the Appellant has pointed to a case where a delay of more than two years was reasonable: Kowdrysh v. Jaguar Land Rover Lakeridge (2333432 Ontario Ltd.), 2024 CanLII 10086 (ON SCSM). The fact that a period of delay in a different case was found to be reasonable (or unreasonable), on its’ own, does not assist the Court in determining whether the delay in this case was reasonable. The reasonableness of the delay, and the explanations for the delay, are fact-specific issues.
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[40] In any event, in determining whether an explanation is reasonable, the Court should generally err on the side of accepting the explanation, as claims should be determined on their merits. 441612 Ontario Ltd. v. Albert, 1995 CarswellOnt 135, [1995] O.J. No. 271 at para. 46.
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[46] The motions judge failed to apply the test under Rule 11.06 and, in doing so committed an error of law. As a result, the decision cannot stand. For the reasons I have set out above, I conclude that the noting in default must be set aside. While that would be enough, on its own, to allow the appeal, there are additional arguments that should be addressed, and I turn to them now. . Gashaw v. Riddell
In Gashaw v. Riddell (Ont Div Ct, 2025) the Ontario Divisional Court allowed an appeal, this from a Small Claims Court order "dismissing the Appellant’s motion to set aside the noting in default".
Here the court considered the SOR for issues of setting aside default judgment in the Small Claims Court as a discretionary decision:[25] In this case, the setting aside of a default judgment is a discretionary decision: Coombs et. al. v. Curran et. al., 2010 ONSC 1312, (2010) 100 O.R. (3d) 554 at para. 16. A motions judge is entitled to considerable deference in the exercise of that discretion, but a decision of this nature can be set aside where there is an error in law or principle, or a palpable and overriding error of fact, or if the decision is so clearly wrong as to amount to an injustice. Hill v. Forbes, 2007 ONCA 443 at para. 4, Swan v. Duggan, 2025 ONCA 302 at para. 8. . Mulders v. Baggia
In Mulders v. Baggia (Div Ct, 2025) the Divisional Court dismissed a motion to extend time to commence a Small Claims appeal, here where appeal was sought from a dismissal of a set aside motion against a default order:[Rules of the Small Claims Court: R11.06]:[34] The motion judge’s decision to either dismiss or grant a motion to set aside default is discretionary: r. 11.06, Rules of the Small Claims Court. It is not the role of an appellate court to replace the motion judge’s exercise of that discretion. An appellate court should only intervene where the motion judge’s discretion was exercised on a wrong principle of law or a clear error was made: Laredo Construction Inc. v. Sinnadurai, 2005 CanLII 46934 (ON CA); Bottran v. Vroom, 2002 CanLII 41691 (ON CA).
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