Commercial litigation can involve complex and nuanced issues. When a matter is in dispute, it is important for the parties to participate in meaningful negotiations in an effort to reach a settlement. However, if one party fails to participate in litigation in a meaningful way, a court may revoke a judgment or order made pursuant to a trial or a hearing where the person affected by the judgment or order could not attend.

A recent decision from the Alberta Court of King’s Bench provides some important context on when such a request might be allowed or denied by a court.

Plaintiffs pay $270,000 for home but receive nothing in return

In the case of Anderson v Novhaus Inc, the plaintiffs sought to purchase a sea can home from the corporate defendant (“Novhaus Inc.”), of which the personal defendant (“AB”) was the principal and director of. The plaintiffs paid the defendants $270,000 by way of two installments as part of a contract to buy a home, however, they received nothing in return for their payments.

As such, the plaintiffs commenced an action against the defendants to recover their money. When the matter came before the Court, it noted that, in a 2000 decision, it previously held that personal liability may be imposed on a director of a company who engages in fraudulent actions related to the corporation’s activities.

Defendants tell plaintiffs they are unable to attend application hearing

The Court heard that, despite advertising its experience in the industry of sea can homes, AB and his company had not completed a single conversion of a sea can into a move-in ready home. Despite repeated attempts by the plaintiffs to obtain information from the defendants, no details about the home were provided to the defendants, including the home’s serial number, which the plaintiffs needed to protect their interest at Personal Property Registry. However, the Court noted that “[w]hatever interest the Plaintiffs might have had was lost when Novhaus’s landlord took possession of its warehouse.”

These events led to the plaintiffs filing an application for summary judgment against the defendants in June 2023. A hearing was set for August 9, 2023, of the same year. On July 6, 2023, counsel of record for the defendants formally withdrew their services. Application materials were subsequently provided directly to the personal defendant, who contacted the plaintiffs by email on July 18, 2023, stating that he was caring for his ailing mother and would be unable to attend the application hearing. He told them he was no longer in Alberta and was not able to hire a lawyer because “he was not there in person and also for financial reasons.”

Application rescheduled; defendants fail to attend

On July 26, 2023, the plaintiffs’ lawyer emailed the defendants indicating that she was prepared to adjourn the application for one month to either facilitate settlement or allow time for the defendants to retain new counsel for the application. However, no response was received. On August 2, 2023, the plaintiffs’ lawyer told the defendants that the application could not be rescheduled without his consent. After several email exchanges, in which the defendants were unclear as to when they would be able to attend a hearing, the matter was rescheduled for September 6, 2023.

No material had been filed by the defendants by the time the application hearing rolled around. Thus, summary judgment was granted by the Court. It was only after this time that the plaintiffs and the Court became aware that AB was in Cameroon the whole time.

Can a summary judgment be set aside if a party fails to appear?

In an affidavit filed on December 7, 2023, AB told the Court he only returned to Canada on October 1, 2023, and that he had been in Cameroon to care for his sick mother. During this time, he indicated that he had limited access to telecommunications and was unaware that summary judgment had been granted against him until October 15, 2023.

AB relied on Rule 9.15(1) of the Rules of Court to set aside the summary judgement, which allows a court to revoke a judgment or Order following a trial or hearing when the affected party could not join because of an accident, a mistake, or a result of insufficient notice. AB also referred to a 2019 decision from the Court which held that “[t]he rule exists to remedy the injustice of an order being granted against a non-attending party where the party would have attended but for some “interfering” event or circumstance.”

Court refuses to set aside summary judgment against defendants

However, in the same decision, the Court wrote that “the reason must be something other than failure to receive notice or insufficient notice. The premise of Rule 9.15(1)(b) is that the party received notice and, despite that notice, did not attend.”

Ultimately, the Court found that this was not a case where any sort of accident was alleged to have occurred. There was also no indication of insufficient notice provided to the defendants, since there was confirmation that they received communication about the scheduled court dates. Finally, being out of the country did not qualify as a “mistake” under Rule 9.15(1). Therefore, the Court concluded that the defendants had almost one month to do something about the situation, but failed to do so. The Court underscored the importance of communication and refused to grant the defendants’ request to set aside the summary judgment.

Contact the Litigation Lawyers at DBH Law for Advice on Commercial Disputes and Debt Recovery

The skilled corporate and commercial lawyers at DBH Law in Calgary have extensive experience advising clients on cost-effective and personalized dispute resolution strategies. When litigation is required, we vigorously protect our clients’ rights. Whether you are involved in a property dispute, or are seeking to recover damages following a contractual breach, contact our litigation team online or by phone at 403.252.9937 to schedule a confidential consultation and learn how we can help you.