Executive Summary: Key Legal and Evidentiary Issues

• Starbucks sought to overturn an Applications Judge's decision declining to set aside a noting in default under Rule 9.15(3), which was ultimately denied on appeal.

• Central to the case was whether Starbucks had an arguable defence regarding its duty of care as an occupier under the Occupiers' Liability Act following an incident involving a wind-tossed patio umbrella.

• No evidence was presented showing Starbucks employees took any steps to monitor weather conditions or ensure umbrella safety on the day of the incident.

• The adjuster's explanation for deleted emails demanding a statement of defence lacked sufficient detail to constitute a reasonable excuse for the default.

• Starbucks' 8.5-month delay between learning of the noting in default and filing its set-aside application failed the "prompt response" requirement.

• Conflicting Alberta Court of Appeal tests for setting aside a noting in default were analyzed, though the court found the outcome would be the same under either test.

Background and incident

Ms. Ashley Steinkey alleges she was injured by a wind-tossed patio umbrella on a Starbucks patio in early June 2018. The location was the Unity Square Starbucks in Edmonton, just west of 116th Street. Starbucks appointed an independent adjuster to handle Ms. Steinkey's claim. After some initial dialogue, Ms. Steinkey filed a statement of claim on May 6, 2020 and served it on Starbucks on May 26, 2020.

Procedural history leading to default

Ms. Steinkey initially agreed to suspend the time for a statement of defence from Starbucks. Ms. Steinkey's counsel and the adjuster had various communications from spring 2020 through summer 2022. On August 26, 2022, Ms. Steinkey's counsel emailed the adjuster to call for a statement of defence within 45 days, at the same time providing Ms. Steinkey's Affidavit of Records and underlying records. Having heard nothing 84 days later, Ms. Steinkey's counsel emailed the adjuster on November 18, 2022 to again call for a statement of defence, indicating a December 9, 2022 deadline. Again, no response. Ms. Steinkey noted Starbucks in default on December 22, 2022 and sent a copy of the Noting in Default to the adjuster the next day. No response followed.

Attempts to set aside the default

On April 25, 2023, counsel for Ms. Steinkey contacted a vice-president at the adjuster's office, providing a copy of the Noting in Default. That day, the VP asked Ms. Steinkey's counsel if she would agree to set aside the Noting in Default; the response was "Not likely." Starbucks retained counsel on or about May 4, 2023, who asked if Ms. Steinkey would agree to set aside the Noting in Default; the response was again "Not likely." Starbucks ultimately filed and served a set-aside application on January 9, 2024—8.5 months after learning of the default. After cross-examinations on certain affidavits, undertakings, and other preparatory steps, the set-aside application was argued before AJ Summers on June 26, 2025. At the close of the application, he delivered an oral decision declining to set aside the Noting in Default. Starbucks appealed, leading to the application before Justice Lema on January 8, 2026.

Legal tests for setting aside a noting in default

The court examined two potentially conflicting tests from the Alberta Court of Appeal. The traditional three-part test from Fort McKay Metis Community Association v Morin, 2020 ABCA 311 requires: (a) an arguable defence; (b) that the defendant did not intend to allow the judgment to go by default and offers some reasonable excuse for the default such as illness or a solicitor's inadvertence; and (c) that once the noting in default came to the defendant's attention, they promptly applied to set it aside. The more recent Liberty Mortgage Services Ltd v River Valley Development Corp, 2025 ABCA 346 decision articulated a broader "fair and just" test, emphasizing that the decision to set aside a noting in default is a discretionary matter. The test is flexible and allows a court to consider a variety of factors including behaviour of the parties, length of the defendant's delay, reason for delay, complexity and value of the claim, and prejudice to the parties. The court noted that under Liberty Mortgage, courts will rarely require a defendant who has been noted in default to show an arguable defence on the merits, but a court may require that where there has been a significant delay.

Analysis of arguable defence

The court found that Starbucks failed to demonstrate an arguable defence. While Starbucks presented evidence of a policy requiring employees to collapse umbrellas if wind speeds exceeded 40 km/h, the court emphasized that it is not sufficient to have a policy; it must be implemented. No evidence showed that, on the day in question, any particular Starbucks employee: ensured the umbrellas were properly secured to their bases; checked the weather or wind forecast at the start of the day or at any point during the day; checked any wind gauge or other physical wind-speed indicator; stepped outside to even informally gauge the prevailing winds; watched the skies for signs of changing weather; watched the patio umbrellas for wind activity; asked incoming customers about the weather; or otherwise took any step to keep an eye on the weather and, specifically, the wind. Joshua Marusiak, the shift supervisor on duty at the time of the alleged incident, acknowledged in cross-examination that he did not specifically recall the weather on June 4, 2018, did not recall whether there were winds that day, and had no specific recollection of when the umbrellas were put up that day, what happened to them after, or "any of that stuff."

Analysis of reasonable excuse

Starbucks' excuse for not defending was that its third party adjuster accidentally deleted emails and was unaware of the demand for a Statement of Defence. The adjuster deposed that her company's information technology department investigated and advised the emails were apparently deleted, but that she did not know how they were deleted, did not intentionally delete them, and did not read them prior to their deletion. The court found this explanation inadequate because the adjuster did not: provide a copy of any report from her IT department of the steps it took to investigate the claimed deletions; offer any explanation of her own that might account for the deletions; or advise whether she learned of any other apparent deletions of emails. The court held that, absent such evidence, a party alleging accidental deletion of critical communications should not be treated as having provided a reasonable, or any, excuse for the deletion.

Analysis of prompt response

The court found that, on any reasonable scale, Starbucks did not move promptly after learning of the noting in default in waiting 8.5 months before bringing its application. The court referenced comparator cases: Fort McKay (applying within one month of notice was prompt); Gowling WLG (Canada) LLP v Tsybulnyk, 2020 ABQB 479 (two months not prompt); Palin v Duxbury, 2010 ABQB 833 (approximately four months not prompt); Atlantic (HS) Financial Ltd v Punjabi, 2017 ABQB 87 (ten months not prompt); and James v Male, 2011 BCCA 81 (49 days not prompt). Starbucks' argument that pre-default timelines should contextualize its own delay was rejected, as the pre-demand-for-defence period does not explain any part of the post-delay, and Starbucks offered no other explanation for why it took 8.5 months to file.

Ruling and outcome

Justice Michael J. Lema of the Court of King's Bench of Alberta dismissed Starbucks' appeal on January 22, 2026. The court found that under either the Fort McKay three-part test or the Liberty Mortgage "fair and just" test, Starbucks failed to meet the requirements for setting aside the noting in default. Under the Fort McKay test, Starbucks did not satisfy any part of the three-part set-aside test or show that the overall result was unfair or unjust for any reason. Under the Liberty Mortgage test, the court found long delay, making arguable defence a factor; found nothing objectionable in any of the steps or stances taken by the Plaintiffs; and concluded all indicators pointed against opening up the noting in default. The plaintiffs, Ashley Steinkey and His Majesty the King in Right of Alberta, were awarded costs of the application gauged at 40 per cent of their reasonable fees and disbursements or Schedule C, whichever is higher, with follow-up written submissions being treated for Schedule C purposes as an additional ½ day. The court noted that given the absence of an arguable defence, a trial is not necessary to explore any legal or factual issues surrounding the incident itself, and the next step will or may be an assessment of damages, for which Starbucks will presumably be given notice and an opportunity to provide its position on the claimed damages. No exact amount was determined or awarded at this stage.