It can be said that ignoring a problem is not usually a good way to ensure it gets resolved. That’s certainly advice that can be applied to legal issues. When it comes to civil litigation, the party being taken to court will have an opportunity to file a response to the allegations made against them. If a party fails to do that, they may find themselves subject to a default judgment in which they can be found guilty or liable for what was alleged without having the opportunity to defend themselves in court.
Someone who believes that what was alleged was true may decide to ignore the process and just accept whatever consequences arise from the matter, but as we see in a decision from the Provincial Court of Alberta, such a decision could have costly mistakes.
Plaintiff sues over purchase and sale of truck
The facts leading to the dispute are similar to those experienced by many people who have purchased and sold a vehicle. The parties involved were, at one time, friends. The plaintiff (“MHH”), through his company, sold a truck to “BH” and also purchased a truck from him in his personal capacity. Both of these transactions would later result in litigation.
Ultimately, MHH would allege that BH had agreed to pay him $14,500 for his truck on October 3, 2020, with payments of $1,000 scheduled for the 1st and 15th of every month. However, by March 2021, MHH told the court he had only received $9,500 from BH. The claim for the remaining amount was filed by MHH one month later, on April 26, 2021.
On the same day, MHH also filed a claim related to the truck she purchased from BHH. In this claim, MHH alleges that he paid $30,000 for a truck from BH only to find out later that BH “didn’t even own the vehicle he sold me.” The truck was eventually returned to the owner on its title, who lives in Montana.
The claims served to BH were hand-written and delivered to him personally. However, the second claim was later amended, and a process server attempted to re-serve BH, though he was not home and his mother refused to accept the documents on his behalf.
Defendant knew he owed the plaintiff money for truck
BH told the court via affidavit that he knew MHH was taking steps to collect just over $15,000 for the truck he stopped making payments on. He was living with his grandmother at the time and was working on oil rigs, which would see him away from home for extended periods. He assumed that the mail he received in relation to the court filings was about the truck he was supposed to have been paying for. He did not defend the claim and allowed things to proceed to a default judgment. BH told the court,
“I did nothing about it because I knew I owed him the money for the Ford truck which I had purchased from him and that I had been unable to keep paying on the balance for a short period. I had no defence to the action for the balance on that transaction.”
However, BH claims he had no idea about the other claim against him, and it wasn’t until he found out that a significant amount of money was being garnished from his pay that he began to think there was something else going on. He asked for the default judgment to be set aside, but MHH took the position that he knew, or ought to have known, that there were two claims.
When would the courts set aside a default judgment?
The court explained two ways a defendant can succeed in setting aside an application. The first would be because the defendant was not properly served. The second would be by establishing that they have a defence on the merits. In this case, the court turned its attention to concerns it had about the service of the original claim as well as the amended claim (the one refused by BH’s mother).
The court said it was obvious BH should have read the documents he was originally serviced with. However, the court accepted his claim that he thought they were concerned about the truck he had purchased from MHH. Even if he had read the handwritten claims, the court thought it would be possible for BH to be confused with the second claim referring to “a truck,” with incorrect dates included. In turning to the service of the amended claim, the court found that BH did not live with his mother, with whom he did not have a good relationship. When not away at a worksite, he lived with his grandmother, which was where his mail was delivered. The court stated that the mother’s refusal to accept the documents should also have led the process server to try to serve BH another way.
The court ruled that BH could succeed on the grounds that service was not properly handled but also applied the test required to set aside a default judgment. The test was summarized in a 2010 Alberta Court of Queen’s Bench decision, which stated,
This test requires the defendant to show that:
(a) have an arguable defence; and
(b) they did not deliberately let judgment go by default and 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 open it up.
BH told the court that he did not sell MHH a truck and did not receive $30,000 from him as detailed in MHH’s claim. He told the court there was no bill of sale for the transaction, and while MHH had not introduced one by that time, he said he could if given the opportunity. The court found this to be a meritorious defence worthy of exploring. The court was also satisfied that BH did not deliberately let the second claim go to default. The court said that while he should have read his mail, it was still reasonable for him to have that understanding since he didn’t even receive the amended claim. The third part of the test was satisfied with the court finding that he moved quickly to try to set aside the default judgment once he learned of it.
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