Episode 5: Default Judgment

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Welcome everyone to the Ontario Small Claims Court Podcast.  I want to thank you for taking the trouble to download this episode today and I hope that I can help you in some small way.

 

In this podcast we are going to talk about bringing a Default Judgment in the Small Claims Court.

 

There are a few ways in which a default judgment can occur.  One way is that the defendant fails to file a defence.  Another way is that the defendant files a defence, but admits to all of debt.  A third way is that a trial is set, but the defendant fails to appear at court on the trial date.

 

The rules surrounding default judgment are mostly contained within Rule 11 of the Rules of the Small Claims Court.  There are a number of pre-conditions that must be satisfied before a default judgment is issued.

 

First and foremost, there must have been a plaintiff’s claim or a defendant’s claim filed and served according to the rules.  This is why Affidavits of Service are so important.  Secondly, the defendant must have not filed a defence within the prescribed time period.  That’s a full 20 days from the day the defendant was served with your claim.

 

Once those two conditions have been satisfied, you can then ask the clerk to note the defendant in default.  This is Form 9B Request to Clerk.  At the top of the form, you fill out which Small Claims Court the matter is in along with its address and the court file number assigned to that case.  You then type in the name of the Plaintiff or Plaintiffs on the appropriate line, and type the name of the Defendant or Defendants on that line.  You will then identify yourself as the person making the request.  You will then make your mark on the first checkbox to note which defendants are to be noted in default for failing to file a defence.  At the end, add the date and sign your name.

 

When you file your completed form with the Clerk of the Small Claims Court, you have now removed that defendant from having any more say in your case.  If you only have one defendant, then you can request an assessment of damages from the clerk.  If that defendant is a person under disability, then you will need to bring a motion to the court for permission to note the defendant in default.

 

What do I mean by disability?  In the Small Claims Court, a person under disability is a minor under 18 years of age, someone who is mentally incapable by the definitions of the Substitute Decisions Act, 1992, or an absentee within the meaning of the Absentees Act.

 

In the Substitute Decisions Act, 1992, the person under disability is a person who is incapable of managing property or unable to appreciate the consequences of a decision or lack of decision about their property.  They are also a person which cannot look after themselves concerning their health care, nutrition, shelter, clothing, hygiene, or safety or is unable to appreciate the consequences of a decision or lack of decision about their personal care.

 

In the Absentees Act, an absentee is a person who normally a resident in Ontario who has disappeared, with their whereabouts unknown, and no knowledge that the absentee person is living or dead.

 

When you have a defendant noted in default, you can then request the clerk to sign a default judgment.  The form you use for this request is Form 11B.  This form looks just like the Plaintiff’s Claim on the first page, so you fill in the blanks just like the first time.  Don’t forget to add the court file number at the top right corner of the form.  On page two, you will only check one box.  Let’s assume that the defendant didn’t file a defence.

 

You now list which defendants, if there is more than one defendant, are to be noted in default.  If you have more than three defendants and they are all noted in default, then you will check the box for additional defendants and on a separate page, list them in the same format as on page two of the Default Judgment form.

 

The next section is the calculation of the default judgment.  Section A is the amount you were suing for.  Section B is pre-judgment interest.  You will have to get this information in one of two ways.  If you are using the Courts of Justice Act set rates, the pre-judgment and post-judgment interest rate changes quarterly.  For up to date information you can Google “pre-judgment interest Ontario” and click on the appropriate link.  Interest in accordance with the Courts of Justice Act has to have been claimed in the Plaintiff’s Claim or the Defendant’s Claim.  If that section is blank, the clerk will probably not sign the document with that information.  Interest is calculated as simple interest if using the Courts of Justice Act rates.

 

If you have a contract in which you describe an interest rate other than the Courts of Justice Act, you can claim this interest rate here.  Let’s say that on your invoice, you have indicated the interest rate of 18 percent per year.  If it forms part of a contract, then the 18 percent interest rate applies.

 

Within Section B, there are two date sections.  The court wants to break out the interest, because this document will be served by the court clerk on all parties to the claim.  The first date section can be either the date of the cause of action (in other words, when you knew you had a claim and you stated it in the Plaintiff’s Claim or Defendant’s Claim), or the date when the claim was filed.  The second date section is the day you bring the Default Judgment form to the court clerk.

 

Once the interest has been calculated, Section C is where you add your costs.  You might want to break this down on a separate piece of paper along with copies of receipts.  The clerk only has the authority to authorize costs that are part of the Administration of Justice Act or the Rules of the Small Claims Court.  Many of these costs are capped by law.  Under the Administration of Justice Act, you have to look to Ontario Regulation 432/93 which are the Small Claims Court—Fees and Allowances.  In the Rules of the Small Claims Court, you will have to look under Rule 19.

Here are a few numbers to consider for costs under default judgment:

  1. You can claim the filing fee for your plaintiff’s claim or defendant’s claim;
  2. You can claim the cost of effecting service of your plaintiff’s or Defendant’s Claim. This cost is capped at $60 maximum.
  3. You can claim the cost of preparing the plaintiff’s or Defendant’s Claim that includes photocopying, binding, the cost of obtaining documents. This cost is capped at $100 maximum.
  4. You can claim the cost of filing the Default Judgment. This is fixed at $35, because that is what you pay for filing the default judgment.

 

Once that is complete, check your math.

 

You will end up going over this form again with the clerk.  Show your work.  When the clerk of the court is satisfied, you can then pay your $35 fee and make sure you leave enough copies with the clerk for each party whether they filed a defence or not.  This helps out the clerk because it is they who serve all of the parties.

 

Rule 11.02 states that the clerk can sign a default judgment if it is for a debt or liquidated demand in money, including interest if claimed.

 

So, what does liquidated mean here?  Liquidated claims are claims for a sum of money that is the result of a contract and does not need the court to assess how much the plaintiff is to receive.

 

To illustrate the point further, here are examples of a liquidated claim:

  1. The plaintiff is someone who provides house painting services. The Defendant is the customer.  A verbal agreement is made for $2,000.00 for the plaintiff to paint the defendant’s house.  The house is painted.  The defendant refuses to pay.  This is a liquidated claim because the price was agreed to before work started.
  2. The plaintiff is a commercial landlord. The Defendant is the owner of a retail company that wants to open a pop-up store in the Plaintiff’s vacant space.  The commercial landlord and the retail tenant make a verbal agreement to rent the space for $2,000.00 a week for six months.  There is no lease or other written agreement.  The first three weeks the tenant payments are fine, but the retail tenant stops paying for weeks four to six.  The retail tenant moves out at the beginning of week seven.  This is a liquidated claim because the math calculation is obvious, three times $2,000.00.
  3. The plaintiff is seller of solar panels. The defendant is a customer that buys the solar panels.  The defendant pays for the panels by cheque for $2,000.00.  When the plaintiff goes to cash the cheque, it is returned NSF.  The Plaintiff sues for the amount of the cheque and the NSF charges incurred.  In their plaintiff’s claim, a copy of the dishonoured cheque and the NSF charge statement is included.  This is a liquidated claim because the amount is fixed and can be verified by the attached copy of the charges.

 

Here are examples of unliquidated claims:

  1. The plaintiff has a car that needs a repair. The plaintiff takes it to the defendant, a car mechanic.  The car is repaired for $2,000.00.  When the plaintiff gets the car back, the same problem is occurring again.  The plaintiff makes a claim for $2,000.00 stating that the repairs were faulty.  This is an unliquidated claim because the court has to figure out the true value of the repair, and the plaintiff might not get all of their money back, even if successful.
  2. The plaintiff buys a house from the defendant. All of the inspections were done.  The plaintiff encounters a problem with their septic system, and finds out that the entire septic bed has to be redone and that the condition of the septic bed existed before closing of the sale.  The Plaintiff repairs the septic bed for $2,000.00.  This is an unliquidated claim because the judge has to make a few decisions, one of them being if the cost of the repair was reasonable, and secondly, whether the cost of the repair represents a legal concept known as “betterment”.  “Betterment,” to put it briefly, is a defendant should only have to pay what the value of the septic bed was before closing as it was figured into the value of the land in total.  The repair has a new life expectancy that the plaintiff will have the benefit of.
  3. The plaintiff is a homeowner who wants to renovate the kitchen of their house. The defendant is a renovation contractor.  The plaintiff puts down a fifty per cent deposit of $2,000.00 to start the project.  A contract is drawn up stating what the agreed work would be on the kitchen renovation.  The renovation is completed, but the plaintiff isn’t satisfied with the work done as it wasn’t completed exactly to the terms stated in the contract.  The plaintiff sues for the return of the deposit.  This is an unliquidated claim because evidence by the judge is needed to figure out what the value of the repairs made actually is.

 

Having said all of this, you can still have a default judgment on an unliquidated demand claim.

 

For this, you have two options.

 

You can either file a motion and supporting affidavit (Form 15A) and fill out Part B of the motion or file a request to clerk (Form 9B) asking for an assessment hearing.  What’s the difference? The fist one becomes a “basket motion” or a motion that does not need to be done in court because there is no other side that can be represented; the defendant no longer has standing until the default is set aside.

 

The Deputy Judge may give three kinds of orders.  The deputy judge may grant your motion and you will have a final order to take to the clerk for enforcement.  The deputy judge may ask for another affidavit seeking additional information.  Or, the deputy judge may ask you to appear in person for an assessment hearing to give oral evidence and answer any questions that the deputy judge may have before granting judgment.  The assessment hearing will proceed like a trial, with the exception that the defendant will not be there.

 

If you are scheduled for an assessment hearing, the only thing that you need to prove is the amount of the damages.  You don’t need to prove whether or not that the defendant or defendants are liable.  That is what the Rules of the Small Claims Court say.

 

However, if it becomes an undefended trial, case law suggests that the court is not just a rubber stamp that says you win by default.  You still have to prove your case and meet the legal tests that arise from your claim.  It is then, and only then, will the court consider whether you have brought enough evidence and proof on the balance of probabilities to grant judgment in your favour.

 

In default judgments of a defendant’s claim, the judgement can only be obtained at a trial or on a motion.

 

When a default has been noted the clerk will not be able to accept a defence or take any other step in the small claims court process.  Defendants who have not been noted in default are also no longer entitled to service of documents except for the following:

  1. Service of Default Judgment;
  2. An amendment of a claim or defence;
  3. A motion after judgment; or
  4. Enforcement proceedings against a judgment debtor.

 

Even though you may have a default judgment in hand, the defendant may still have a chance to bring this back into the small claims court again.

 

Now, let me switch hats for a moment and work for the defendant for a bit.  If you are sitting with a default judgment against you, all is not lost.  You can bring a motion to the Small Claims Court to set aside the default judgment.  But you can’t delay.  In your affidavit in support of the motion, you will have to state when default judgment came into your knowledge, and that you have a valid defence and a reasonable explanation why the defence wasn’t filed.  In addition to the supporting affidavit, you will need to draft a defence on Form 9A for the deputy judge on the motion for him or her to review.  These kinds of motions crop up when the Plaintiff hasn’t served the defendant properly, for example, the claim is served to an address that the defendant no longer lives at.  They also crop up when the defendant is out of town and couldn’t respond to the plaintiff within the twenty days to file a defence.

 

That wraps up this podcast.  Your comments and questions are always invited.  There are guides written by the Ministry of the Attorney General that are available at most Small Claims Court locations or on line at www.attorneygeneral.jus.gov.on.ca/english/courts/guides.  There you will find the Guide to Motions and Clerk’s Orders.

 

Thank you for listening and I hope you join me again soon.