When an individual or business is served with a Statement of Claim or a Civil Claim in Alberta, it is critical that they respond within the prescribed time period set out in the Alberta Rules of Court. Failing to respond can have serious legal and financial consequences. One of the most significant of these is the possibility of a default judgment being entered against the defendant.
A default judgment is a court order that grants the relief sought by the plaintiff (the person bringing the claim) simply because the defendant (the person being sued) failed to defend the claim. In other words, if you do not take timely steps to respond, the court may assume that you do not dispute the allegations and may automatically find in favour of the other party. At OP Lawyers LLP, our Calgary Civil Lawyers can help you better understand how to deal with default judgments.
What Is a Default Judgment in Alberta?
A default judgment occurs when the plaintiff obtains judgment from the Court because the defendant has not filed a Statement of Defence, Dispute Note, or otherwise taken steps to contest the claim within the required time.
Under the Alberta Rules of Court, when a Statement of Claim is served, the defendant must file a Statement of Defence or Dispute Note within a specified number of days:
- 20 days if served in Alberta;
- one month if served elsewhere in Canada
- two months if served outside the country.
If no response is filed within that time, the plaintiff may apply to the Court for Noting in Default, which formally records that the defendant has failed to defend. After the defendant is noted in default, the plaintiff may then seek default judgment, meaning the Court may grant judgment for the amount claimed or other relief sought in the Statement of Claim.
Default judgments can be entered for liquidated claims (specific, readily calculable amounts, such as unpaid invoices or loan balances) or for unliquidated claims (amounts requiring court assessment, such as damages for personal injury). In either case, once judgment is granted, it becomes a binding order of the Court and can be enforced against the debtor.
The Consequences of a Default Judgment in Alberta
A default judgment is not simply a procedural matter, it carries real and lasting consequences for the defendant. Once granted, the plaintiff becomes a judgment creditor, and the defendant becomes a judgment debtor. The creditor may then take a variety of steps to enforce the judgment, such as the following:
1. Writs of Enforcement
The judgment creditor may register a Writ of Enforcement at the Court of King’s Bench of Alberta, formally recording the existence of the judgment. The Writ allows the creditor to take enforcement actions under the Civil Enforcement Act and the Civil Enforcement Regulation.
Once registered, the creditor can:
- Register the Writ with the Alberta Personal Property Registry (PPR), which notifies lenders and other third parties of the debtor’s outstanding judgment;
- Conduct a name search through Alberta Land Titles to identify any real property owned by the debtor; and
- Register the Writ against the debtor’s land holdings, creating a Land Titles Registration that can prevent sale or refinancing of the property until the judgment is satisfied.
These registrations can significantly affect a debtor’s financial standing. Lenders, landlords, and potential business partners routinely conduct such searches, and discovering a Writ of Enforcement can deter them from extending credit or entering into financial relationships.
2. Garnishment and Asset Seizure
Once a default judgment is obtained, the creditor may also pursue garnishment of the debtor’s wages or bank accounts. Using information disclosed through court processes, such as a Financial Statement of Debtor (Form 13 or 14)—the creditor can locate the debtor’s employment and financial accounts and arrange for funds to be redirected toward satisfying the judgment.
In some cases, the creditor may seize and sell the debtor’s property through a Civil Enforcement Agency, using the proceeds to reduce the debt. If the debtor owns land, the creditor may even serve a Notice of Intention to Sell under the Civil Enforcement Act, and, after the statutory waiting period (typically 180 days), apply to the Court for permission to sell the property to satisfy the judgment.
3. Credit and Reputational Impact
A default judgment can also damage a debtor’s credit rating and reputation. Credit reporting agencies often record judgments, which can appear on credit reports for several years. This may affect the debtor’s ability to secure loans, mortgages, or even rental accommodations.
Moreover, default judgments are public record. They can be discovered by employers, business partners, and financial institutions conducting due diligence.
Why It’s Important to Respond to a Claim
Responding to a Statement of Claim is not only a procedural obligation, it is your opportunity to tell your side of the story. Ignoring the claim means forfeiting your right to present evidence, make legal arguments, or negotiate a resolution. Below are several key reasons why responding promptly is crucial.
1. To Prevent Default Judgment
The most obvious reason is to avoid a default judgment altogether. Once a judgment is entered, reversing it can be difficult, time-consuming, and expensive. Although the Alberta Rules of Court allow a defendant to apply to set aside a default judgment, the Court will only do so if the defendant can show:
- A reasonable excuse for failing to respond on time;
- A potentially valid defence to the claim; and
- That the application to set aside the judgment was made promptly.
Even if successful, setting aside a judgment does not erase the stress, cost, and potential reputational harm caused in the meantime.
2. To Preserve Your Legal Rights
Filing a Statement of Defence ensures that your legal rights are preserved. You can dispute the plaintiff’s allegations, raise counterclaims, or negotiate a settlement from a position of strength. By responding, you remain an active participant in the process rather than a passive subject of enforcement.
3. To Control Costs and protect your assets
Responding early may allow disputes to be resolved efficiently, through negotiation, mediation, or consent orders, rather than through costly enforcement actions. Once a default judgment is entered, the creditor’s enforcement expenses (such as filing fees, legal costs, and civil enforcement agency fees) can be added to the amount you owe, increasing your total liability. As noted, a judgment creditor may register a Writ of Enforcement or garnish your wages or bank accounts.
Conclusion
If you are served with a Statement of Claim, do not ignore it. Carefully review the document, note the deadlines for response, and seek legal advice immediately. Filing a Statement of Defence or Dispute Note within the required time frame preserves your rights, gives you control over the process, and may ultimately save you significant time, money, and stress. At OP Lawyers LLP, our Calgary Civil Lawyers can provide guidance with respect to default judgments.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. For advice specific to your circumstances, please consult a qualified lawyer at OP Lawyers LLP or another legal professional.