The defendant brought a motion to set aside a default judgment and writ of seizure and sale arising from a breach of contract claim related to services for preparing SR&ED tax credit documentation.
Applying the test articulated by the Court of Appeal, the court considered promptness of the motion, explanation for the default, existence of an arguable defence, potential prejudice, and the integrity of the administration of justice.
Although the court expressed doubts about the credibility of the defendant’s evidence regarding service and the factual basis of the defence, it accepted that the motion was brought promptly and that there was a plausible explanation for the failure to defend.
The court also found that the defendant had an arguable defence on the merits concerning whether it qualified for SR&ED credits and whether the contract had been terminated.
Balancing the relevant factors, the court concluded that the interests of justice favoured setting aside the default judgment.