Executive Summary: Key Legal and Evidentiary Issues

• The plaintiff obtained a default judgment by filing an affidavit for a debt or liquidated demand rather than following the standard noting-for-default process under Rule 3-21.
   
• Characterization of the underlying claim as one for damages, rather than a debt or liquidated demand, proved decisive to setting the judgment aside.
   
• Wrong court forms were used to obtain the judgment, including an affidavit styled for a non-damage claim.
   
• Defendant's application for leave to file a statement of defence required it to satisfy a four-part test, and it failed to meet two of the four criteria.
   
• Timeliness of the defendant's response and the adequacy of its explanation for not defending the claim earlier were both found wanting.
   
• Costs of the application were awarded to neither party given the divided success between the plaintiff and defendant.
   

Facts of the case

Industrial Machine & Mfg. Inc. (the plaintiff) issued a statement of claim against Clean Seed Agricultural Technologies Ltd. (the defendant) on October 5, 2023, which was served by prepaid registered mail on October 11, 2023, at the defendant's address on file with British Columbia Registry Services. No statement of defence was delivered. Rather than noting the defendant in default under the standard process, the plaintiff filed an "affidavit for default judgment on a debt or liquidated demand" on November 21, 2023. This filing led a Deputy Local Registrar to issue a default judgment for $421,412.49 including interest, plus costs, for a total judgment of $422,773.54 [the judgment states this occurred "on November 21, 2025," which is inconsistent with the November 21, 2023 date used elsewhere in the decision, including in the formal order]. On March 12, 2026, the plaintiff obtained a certificate to register the judgment in British Columbia. This apparently brought the judgment to the defendant's attention, and on March 27, 2026, the defendant applied without notice to set aside the default judgment as improperly or prematurely obtained. Justice Danyliuk issued a fiat on March 30, 2026, directing that the application proceed by way of a hearing on notice. That hearing took place on April 9, 2026, with the decision reserved and further enforcement enjoined in the interim.

Policy and legislative provisions at issue

The decision turns on several provisions of The King's Bench Rules. Rule 3-21 sets out the general process for noting a defendant in default and provides that only once default is noted may the plaintiff "enter judgment or take any other proceedings" available on default. Rule 3-21 was read together with Rules 3-22 and 3-23, which the court found the plaintiff had failed to do; the judgment describes the plaintiff's approach as improperly isolating the affidavit-filing provision from the broader default framework. Rule 17-1's definition of "liquidated demand" was also considered, with the court concluding the plaintiff's claim did not fit within it. The affidavit filed by the plaintiff was further found not to comply with Rule 13-31(1)(d) governing affidavit style. On the question of setting aside a default judgment, Rule 10-13 permits the court to "set aside or vary the judgment on those terms as to costs or otherwise that the Court considers fit."

Reasoning and analysis

Justice Danyliuk rejected the plaintiff's position that no noting for default was required because the claim was for a debt or liquidated demand. The claim itself contradicted this characterization: the statement of claim sought "damages in the amount of $404,888.60," and pleaded breach of contract and unjust enrichment, both damage-based causes of action. Because the claim was properly one for damages rather than a debt or liquidated demand, Rule 3-23 applied, requiring the plaintiff to note the defendant in default before applying to have damages assessed — a step the plaintiff never took. The court also noted the affidavit and default judgment forms used were designed exclusively for non-damage claims, compounding the irregularity. On this basis, the judgment issued November 21, 2023 was found to have been obtained irregularly and could not stand. Turning to the defendant's request for leave to defend, the court applied the four-part test from Strange (Middle Lake Hotel 2002) v Saskatchewan (Advanced Education Employment and Labour), 2008 SKQB 481, considering timeliness of the application, adequacy of explanation for the default, existence of an arguable defence, and prejudice to the plaintiff. The court found the defendant had raised arguable defences and that no prejudice would result to the plaintiff. However, it found the defendant's Chief Financial Officer, Steven Brassard, had not provided a satisfactory corporate-level explanation for the failure to respond to the claim, and there was no clear evidence establishing when the application was brought relative to when the judgment came to the defendant's attention, given the defendant's corporate counsel had known of the claim since October 2023.

Ruling and overall outcome

The court set aside the default judgment issued November 21, 2023 in the sum of $422,773.54, without prejudice to the plaintiff reapplying for judgment in chambers on notice to the defendant. The plaintiff was directed to take steps to discharge any British Columbia registration of that judgment and to provide proof of discharge within 120 days. At the same time, the defendant's application for leave to file a statement of defence was dismissed, as the defendant failed to satisfy two of the four required criteria. Success was therefore divided: the plaintiff's irregularly obtained judgment could not stand, but the defendant was denied the opportunity to defend the action at this stage, with the plaintiff free to reapply for judgment in chambers. Reflecting this divided outcome, the court exercised its discretion to award no costs of the application to either party.