Swain v McLachlan, 2016 ABQB 8

Court of Queen ’ s Bench of Alberta Citation: Swain v McLachlan, 2016 ABQB 8 Date: 20160105 Docket: 1203 19025 Registry: Edmonton Between: Nes Paul Swain Plaintiff - and - Graeme McLachlan and Steve Ernest McLachlan Defendant _______________________________________________________ Reasons for Judgment of W. S. Schlosser , Master in Chambers _______________________________________________________ [ 1 ] This is an application to open up a noting in default. It is a motor vehicle liability case, involving a rear-end collision. [ 2 ] The accident happened about five years ago.

The defendant, Steve McLachlan, owned, and was a passenger in a vehicle operated by his son, Graeme. Steve McLachlan says that the plaintiff pulled out of an alley-way onto the road in front of them and that his son, who was already slowing for a red light, could not stop in time. The road was icy and there was a skiff of snow. Mr. McLachlan says that their ‘good defence on the merits’ is that the plaintiff cut them off; causing, or at least contributing to the accident.

Background Facts [3] The Statement of Claim was served on the defendants with some difficulty. It had to be renewed because the defendantswere hard to find. They were eventually served substitutionally. The defendants’ motor vehicle liability insurer was notifiedimmediately. The insurer contacted the plaintiff’s lawyer to ask if defence is required. The plaintiff’s lawyer did not reply and “did notconfirm that a Statement of Defence was required”. [4] Over a year passed.

When the matter did not settle the plaintiff noted the defendants in default. [5] This case mirrors the all too common situation of a plaintiff asking for an extension of time for service when settlementnegotiations between the plaintiff and the defendants’ motor vehicle liability insurer break down. This time the shoe is on the other foot.It is the defendants’ insurer asking for an indulgence. [6] The Court’s ability to extend the time for service after expiry of the Statement of Claim is limited. Rule 3.27 applies. Thereare not many exceptions and they tend to be applied strictly.

The majority of the Court of Appeal in McGowan v Lang, 2015 ABCA 217said that the “takeaway” for plaintiff’s counsel in those circumstances is (at para. 35), ‘just serve it’. [7] It is tempting to say that the takeaway here should be ‘just defend it’ and deny the application. If there is to be a playingfield, it should be level. Opening up a default [8] The locus classicus is, Don Reid Upholstery Ltd. v Patrie, (AB KB), 1995 173 AR 233.

In that case,Veit, J. said: The appellant, Don Reid Upholstery Ltd., argues that case law requires that the litigant who wants to set aside a default judgment mustcomply with three sets of requirements: - the default of making defence was unintentional; - the application to set aside the default judgment was brought as soon as the default judgment was brought to the attention of thelitigant; - there is a good defence on the merits. References to these tests abound in the case law. The applicant cites much of the best known of this case law in support of its position.

However, in the best traditions of the profession, the lawyer for Don Reid Upholstery Ltd. also refers to “Saudi Eagle”. In thatdecision, the British Court of Appeal reminds us that discretion, by definition, rejects rigid rules. When judges say that an applicant mustprove the three things set out above, they are merely using a form of shorthand; they are saying that fairness must always be done andthat usually fairness requires that these three things be proved.

Under R. 158, the court has discretion to do what is just; the most thatcase law can do is to provide “general indications to help the Court in exercising the discretion”. Thus, for example, it is unlikely that acourt will set aside a default judgment unless the party applying can show that it has a defence on the merits. Similarly, a court will beunlikely to grant a motion to set aside a default judgment unless the party applying can demonstrate that they acted promptly to set thejudgment aside once they became aware of the judgment.

Our own Court of Appeal has, of course, taken the same approach as the British Court of Appeal. In many different situations, ithas emphasized that the objective of the Rules is to achieve fairness, not blind adherence to mere formalism, And see Pino Bros Commercial Inc v Silver Gold Bull Inc, 2014 ABQB 227 per Schulz (

M) on this latter point. [9] The threshold for a good defence on the merits is low. At the very least, the applicants should say what it is and provide, orat least point to, some evidence in support. The court will not act without purpose. Even at this stage, the court, especially in thispost-Hryniak culture, should be vigilant to eliminate non-starters. In this case, the evidence is slight and hardly impartial; the defendantowner is defending his son’s driving.

He furnished an affidavit in support and was cross examined on it. [10] The plaintiff/respondent asks that the defendants only be permitted to file a limited defence; Kronau (Village) v Euteneier,(1916) (SK CA), 10 WWR 351, 28 DLR 212 (at paras 3-5), Sask SC, En Banc; perhaps a Demand for Notice thatwould allow them to contest quantum. A Demand for Notice is a limited defence of a defendant who admits liability to see that he is notheld liable for more than he should be.

It is a partially defended action, allowing the defendant to test quantum by cross-examining theplaintiff and his witnesses and, if necessary, by adducing evidence on the question of damages but it does not go to liability: Chiste vNorthern Electric Co. (1978), (AB KB), 7 Alta LR (2d) 183 at 187-8, per Hyndman, M; Bell v Grande MountainApartments (1984), (AB KB), 50 AR 372, per McFadyen, J., Rules 3.30 (c), 3.34 and the annotation in The AlbertaCivil Procedure Handbook 2016 at p. 3-55 – 3.54. A Demand for Notice will impair the contribution defence which goes beyondquantum to liability.

Disposition [11] It is very tempting to treat motor vehicle liability insurers (who are the true applicants here) as a class and dispense to themthe medicine they seek to give to others when the situation is reversed. After all, the remedy is discretionary. [12] As tempting as that might be, the interests of fairness or justice require that the potential contribution, or responsibility of the

plaintiff be fleshed out in the ordinary course of the lawsuit. [ 13 ] The application is allowed. The defendants are permitted to file their proposed defence within 10 days of the date of this decision. However, I do not think it is appropriate that the applicant be rewarded with costs. Heard on the 18 th day of November, 2015. Dated at the City of Edmonton, Alberta this 05 th day of January, 2016. W. S. Schlosser M.C.C.Q.B.A. Appearances: Jose Delgado Bishop & McKenzie for the Plaintiff Jim Chronopoulos Chatwin LLP for the Defendant