At this morning’s muffin meeting, we discussed the test to set aside a default judgment. We also went over a Divisional Court case that addressed the effect of a sealing order on subsequent litigation.
Setting Aside Default Judgments
Ankita Abraham went over the five-part test to set aside a default judgment:
- whether the motion was brought promptly after the defendant learned of the default judgment;
- whether the defendant has a plausible excuse or explanation for the default;
- whether the defendant has an arguable defence on the merits;
- the potential prejudice to the defendant should the motion be dismissed, and the potential prejudice to the plaintiff should the motion be allowed; and
- the effect of any order the court might make on the overall integrity of the administration of justice
These factors are not rigid rules. The court has to decide whether, in the particular circumstances of the case, it is just to relieve a defendant from the consequences of default.
In Egredzija v. Gullett, 2019 ONSC 6475, Justice LeMay set aside a default judgment.
The defendant, who was self-represented at the time, stated that he called and e-mailed plaintiff’s counsel indicating that he was deciding on a lawyer to retain. The defendant requested to be notified before being noted in default.
Six months later, the plaintiff sought and obtained a default judgment and then commenced garnishment proceedings.
The plaintiff’s lawyer denied that a phone call was made by the defendant. Justice LeMay did not accept this evidence.
Further, after receiving the e-mail from the defendant, the plaintiff’s lawyer should have responded to indicate that the defendant had been noted in default.
In terms of whether the defendant had an arguable case on the merits, Justice LeMay noted that the test is whether or not there is an air of reality to the defence. It is not whether or not the defence is correct. The court should not weigh credibility at this stage.
Justice LeMay also noted that the Court of Appeal encourages cases to be decided on their merits. His Honour stated that allowing technical arguments to succeed would run the risk of bringing the administration of justice into disrepute in a circumstance where there is no significant prejudice to the side seeking to enforce the technical argument.
Effect of Sealing Order
Matthew Umbrio advised us of the Divisional Court’s decision in Van Every v. Findlay, 2019 ONSC 6854. An infant’s statutory accident benefits claim settled. The court approved the settlement and sealed the court file.
The claimant then sued his former lawyer for negligent representation. The former lawyer wanted the documents in the court file. The claimant would not provide them on the basis of the court file being sealed.
On a motion to vary the sealing order, the former lawyer was granted standing and was permitted access to the court documents.
The Divisional Court allowed an appeal. The Court indicated that the sealing order shielded the documents from scrutiny by the public.
However, it did not limit or otherwise speak to the independent rights of litigants to documentary discovery. It did not relieve the plaintiff of his documentary disclosure obligations under the Rules of Civil Procedure, nor did it bar discovery by the former lawyer of documents relevant to the negligence claim against him.
The Court held that the former lawyer has the right under rule 30 of the Rules of Civil Procedure to seek production of the documents in the court file.
It was unnecessary and improper to vary the sealing order because it did not affect the lawyer’s interests, and there was no basis on which to grant the lawyer standing to challenge the order.
The end result is that the former lawyer can seek discovery of the documents in the court file. If there are any privilege issues, they be addressed by way of a motion.