Insurer’s Motion to Set Aside Default Judgment was Dismissed

Contrary to the trend towards tolerancy in setting aside default judgments, an insurer’s motion to set aside default judgment was dismissed.

Kisel v. Intact Insurance Co., [2014] O.J. No. 3812, August 18, 2014, Ontario Supreme Court of Justice, P.M. Perrell. J.

The insured plaintiffs were injured in a car accident and applied for no-fault accident benefits which should have been covered by the defendant insurer. The insureds received medical treatment and assessments. The insurers were subsequently invoiced for these services but allege that the service providers began to submit excessive claims for payments. The insureds and the insurer eventually reached a settlement of all accident benefits and signed hold harmless agreements in favour of the insureds with respect to claims brought by the service providers.

The service providers began to demand payment from the insureds for the outstanding invoices. The insureds’ lawyer made numerous inquiries of the insurer as to whether the insurer had settled the accounts with the service provider pursuant to the hold harmless clause. The insurer was not responsive to this line of correspondence. The insureds commenced two separate actions against the insurer to enforce the hold harmless clause and advised the insurer they insisted on a timely defence being filed pursuant to the Rules. The insurer did not file a defence, rather it wrote letters advising of its position that the hold harmless clause had not yet been triggered.

The statement of defence was not delivered and the insurer was noted in default in both actions and default judgment was made against it in one of the actions.  The insurer applied to set aside the note in default and default judgment.  The court acknowledged that “motions to set aside a default judgment are like horseshoes and hand grenades where close enough to the target is good enough to ensure success”, but went on to dismiss the insurer’s motion. It found there was no plausible excuse for the insurer’s default in complying with the Rules. There was an explanation, being the insurer’s stubbornness and tardiness in responding to the insureds’ correspondence, but this was not a plausible excuse. The court was also persuaded by the fact that the true foe in this action was the service provider and the insurer still had its action against the service providers.

This case was originally summarized by Djuna M. Field of Harper Grey LLP.

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