Executive Summary: Key Legal and Evidentiary Issues

• The main issue was whether the defendants offered a credible explanation for their delay in filing a statement of defence or seeking an extension of time.

• The appeal questioned if the motion judge applied the correct legal test for setting aside default judgment under rule 19.08 of the King’s Bench Rules.

• It was disputed whether the defendants demonstrated an ongoing intention to defend the action.

• The appellate court examined if there was a misdirection in law or fact or if discretion was improperly exercised.

• The defendants argued the motion judge failed to consider their arguable defence and potential prejudice to the plaintiff.

• A subsequent practice direction requiring service of a motion for default judgment was noted but did not apply retroactively to affect the outcome.

Facts of the case

Lucrecia Agusti, an eighty-two-year-old woman at the time of trial (eighty at the time of the incident), was injured on November 14, 2022, when she slipped and fell at premises owned and managed by Fortified Developments Inc. and Forthright Management Inc. She suffered extensive injuries and was hospitalized for a number of days. On June 15, 2023, she retained the services of lawyer John Michaels. After repeated unsuccessful attempts to obtain a response from the defendants or their counsel, Michaels issued a statement of claim on October 4, 2023. The statement of claim was served upon the defendants personally and upon their law firm registered for corporate purposes. Although Grant Driedger of the defendants’ firm called Michaels, they did not connect, and no further response, confirmation of representation, or request for an extension to file a defence followed.

On November 10, 2023, Michaels noted the defendants in default. On March 13, 2024, he obtained default judgment in the amount of $113,126.50, which included $85,000 in general damages. Under the King’s Bench Rules, Michaels was not required to serve the defendants or their counsel with the motion for default judgment after noting default.

The defendants moved to set aside the default judgment, filing affidavits from a senior property manager and a legal assistant. No affidavit was filed by Driedger. The motion judge dismissed the application, finding no satisfactory evidence of an ongoing intention to defend, no adequate explanation for the delay, and no reasonable explanation for not filing a defence despite bringing the motion with dispatch.

Outcome of the decisions

The Manitoba Court of Appeal dismissed the defendants’ appeal. The defendants contended the motion judge erred by failing to apply the proper legal test, not considering the merits of their defence or prejudice to the plaintiff, and misapplying the evidence. The appellate court found no error of law or misdirection in fact, nor a decision so clearly wrong as to amount to an injustice. The court emphasized that its role was not to re-weigh the factors considered by the motion judge. It noted the lack of direct or indirect evidence providing a credible explanation for the delay in filing the defence or seeking an extension. The appeal was dismissed with costs on the tariff. The court acknowledged the issuance of a new practice direction on June 21, 2024, requiring service of a motion for default judgment in most cases, but this did not affect the case at hand.