To set aside a default judgment against your corporation in Ontario, you must act immediately. Under the Rules of Civil Procedure, you must file a motion demonstrating a reasonable excuse for failing to respond to the Statement of Claim and proving that you have a genuine, arguable defence on the merits of the case.
Discovering that a court has ruled against your business without your involvement is a terrifying experience for any owner. Whether your company is headquartered in Toronto, operates a warehouse in Mississauga, or runs a retail shop in Ottawa, missing a legal deadline can lead to disastrous consequences. When a corporation fails to file a Statement of Defence within the required 20 days, the plaintiff can obtain a default judgment. 📋
A default judgment allows the suing party to freeze your corporate bank accounts, garnish incoming receivables, and seize company assets. However, Ontario courts prefer to decide cases on their actual merits rather than technicalities. This guide outlines the emergency steps your corporation must take to reopen the commercial lawsuit and defend itself properly as of May 2026. 🚨
Step-by-Step Process in Ontario Superior Court
Reversing a judgment is not as simple as calling the courthouse and asking for a second chance. The legal threshold is strict, and because your business is incorporated, it must generally be represented by a licensed commercial litigation lawyer in the Superior Court of Justice. Here is the standard procedure to fight back. 📝
Step 1: Act Immediately to Halt Enforcement
The moment you discover the default judgment, you must spring into action. Delay is the number one reason judges refuse to set aside judgments. Your lawyer will likely contact the plaintiff’s law firm immediately to request they voluntarily pause enforcement (like bank garnishments) while you prepare your motion. If they refuse, you may need an urgent emergency hearing to stay the enforcement. ⏱
Step 2: Draft an Affidavit Explaining the Delay
To convince a judge, you must provide a sworn statement (Affidavit) outlining exactly why you did not respond to the initial Statement of Claim. Valid excuses might include administrative errors, the documents being served to an outdated registered address, or a sudden, severe medical emergency involving the sole director. Simply ignoring the lawsuit because you thought it was frivolous is never an acceptable excuse. 👤
Step 3: Demonstrate an “Arguable Defence”
Having a good excuse for the delay is only half the battle. You must also prove to the court that if the judgment is set aside, your business actually has a chance of winning the case. This is called showing an “arguable defence on the merits.” You cannot just say, “We do not owe this money.” You must provide contracts, emails, or invoices that contradict the plaintiff’s claims. 💰
Step 4: Serve and File the Motion Record
Once your legal arguments and evidence are compiled, your law firm will draft a Notice of Motion to Set Aside the Default Judgment. This record must be formally served on the plaintiff and filed with the local Superior Court of Justice. A judge will then review the materials during a motion hearing to decide if your business deserves a chance to defend itself. 🏛
How Much Does it Cost in Ontario?
Fixing a default judgment is significantly more expensive than filing a defence on time. Courts often penalize the defaulting party by making them pay legal costs. 💵
- Court Filing Fees: Filing a motion in the Ontario Superior Court of Justice currently costs approximately $339 CAD.
- Plaintiff’s Costs (Throwaway Costs): Judges often order the defaulting corporation to pay the plaintiff’s wasted legal fees for having to deal with the default. This is known as “costs thrown away” and usually ranges from $1,000 to $3,500 CAD.
- Your Lawyer Fees: Hiring a corporate litigation lawyer to draft the urgent motion and attend the hearing typically costs between $3,500 and $10,000+ CAD, depending on the complexity of the commercial dispute.
How Long Does the Process Take?
You must instruct your lawyer to act within days of discovering the judgment. However, getting a date to argue the motion before a judge in busy jurisdictions like Toronto or Brampton can take anywhere from 2 to 5 months. During this waiting period, your lawyer will ask the court for an interim stay to prevent the plaintiff from draining your corporate accounts. 🕑
Frequently Asked Questions (FAQ)
Can I represent my corporation to set aside the judgment?
Generally, no. Under Rule 15.01 of the Ontario Rules of Civil Procedure, an incorporated business must be represented by a licensed lawyer in the Superior Court, unless a judge grants special permission (leave), which is rare.
What happens if the judgment was in Small Claims Court?
If the lawsuit was for $35,000 CAD or less, it was likely in Small Claims Court. The process to set aside a default judgment there is simpler, faster, and allows a corporation to be represented by an owner, an employee, or a licensed paralegal.
What if I intentionally ignored the Statement of Claim?
If you willfully ignored the court documents hoping the problem would go away, it is very difficult to get the judgment set aside. Judges have little sympathy for business owners who disrespect the judicial process.
Will the judgment affect my company’s credit score?
Yes. Default judgments are a matter of public record and are routinely picked up by commercial credit bureaus like Equifax and TransUnion. This can destroy your corporation’s ability to secure loans or business credit cards.
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