Redress Risk Management (post until May 31/19)
Civil Litigation

Extra default judgment steps exacerbating justice system problems

Judges are adding to the cost and delay of an already overburdened court system by requiring plaintiffs to serve motion records on defendants before judgment, even after they’ve already been noted in default, says Toronto senior litigation lawyer Jeffrey Silver.

Although Ontario’s Rules of Civil Procedure explicitly state that defendants, once noted in default, are not entitled to notice of a motion for default judgment, a judge concluded in a 2012 case that it was “by far the better practice” to serve materials anyway.  

But Silver, principal of Jeffrey C. Silver Barrister, says he’s troubled by the practice’s entrenchment in recent years, with a number of judges citing the 2012 case and adjourning motions for default judgment unless the defendant has been served.

“By adding extra steps that don’t exist in the rules, judges are adding unnecessary cost and delay to the process,” he tells AdvocateDaily.com. “The rules are very clear, and they appeared to work in the 25 years they were followed before these developments. I don’t think it’s necessary or beneficial.

“It’s an unwelcome form of judicial activism for these further requirements to be added,” Silver adds.

The 2012 case involved a company suing its former controller over an alleged $12-million fraud executed over a number of years. The defendant was noted in default, but the judge ordered that motion materials be served on him before granting a default judgment, even though it was not required by the Rules of Civil Procedure.

“The main reason for this practice is a simple, but important, one," the judge explained. "Often the materials filed on a Rule 19.05 motion for default judgment will raise questions about the adequacy of the service of the Statement of Claim. Some motion records do not include the affidavit of service of the originating process; that is not good practice. Even where the Registrar has noted a defendant in default, a judge will want to satisfy himself or herself that the defendant was given proper notice of the claim. By serving the default judgment motion record on the responding party and filing proof of such service, a court can satisfy itself that the person against whom default judgment is sought knew about the claim, knew about the motion for default judgment yet, nevertheless, elected not to defend or respond.”

While there may be some logic to that reasoning, Silver says it creates an inequity between cases depending on whether they concern liquidated or unliquidated damages. When damages are liquid, a court registrar is able to sign a default judgment for the amount, in addition to noting the defendant in default.

However, when the damages are not liquid, a motion must be brought before the court, so a judge can determine whether the facts demonstrate that the plaintiff is entitled to the full amount claimed.

“Why is a judge saying he needs more than a registrar, who can also issue a judgment for significant amounts of money if it’s a liquidated claim,” Silver says. “I think the better alternative would be for plaintiffs to set out their efforts in detail in the motion record, including the affidavit of service of the originating process.”

As more judges endorse the approach laid out in 2012, Silver says they are contributing to a negation of the very purpose of the default judgment regime.

“The point is to clear an overburdened court system of cases where parties do not wish to defend,” he says.

In addition, Silver says there are already adequate safeguards built into the rules for defendants who wish to set aside default judgments.  

“The test is not overly burdensome,” he says, adding that essentially a party must only demonstrate an arguable defence to the claim, have a reasonable explanation for their lack of response, and show there was no undue delay in bringing the motion to set aside the default judgment.  

"Furthermore," says Silver, "the factors that govern a motion to set aside a default judgment are not to be treated as rigid preconditions such that the failure to satisfy any one of them would require the dismissal of the motion."

He says most of the cases which cite the 2012 decision involve defendants who have failed to take any steps to defend an action, but he explains that default can also be noted in cases where an initially filed defence is struck due to a party’s non-compliance with subsequent court orders.  

Although he’s not aware of any matters where a judge has required service of a motion for default judgment when a defence has been struck, Silver says it would be even more unjustified to force plaintiffs to take the extra steps in those cases.

“It would definitely be overkill because the defendant will already have been ignoring court orders,” he says. “The plaintiff will already have been forced to run up huge costs until the defence was struck, so there’s no reason why the defendants should get another opportunity to comply.”

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