Default judgment for a liquidated claim, other claims, third-party claims, and the test on each

January 20, 2024 | By Sehaj Thind

Default Judgements

On occasion, our client may be lucky and the opposing party (who has been properly served) has failed to file and serve a response to the claim within the time allotted.^[1] Even luckier if the opposing party willfully and deliberately failed to file a defense, took an excessive amount of time to file a response, and/or never had a claim worth investigating in the first place.^[2]

The defendant has essentially accepted the claim against them, for the debt owed or assets to be transferred. However, if this step requires any form of investigation, even though judgement has been made, the file becomes more complex as it is now an issue regarding damages, which falls under the jurisdiction of a Judge and not a Registrar.

Therefore, even before a claim is made, it is key to determine exactly what the client is looking for as there are several pitfalls that can prevent a default judgement from being obtained.

Liquidated Claims

As per Rule 3-8(3) of the SCCR, default judgement is available for claims against a defendant for a recovery of money in an ascertainable or specified amount, and can only be for the amount claimed, the interest, if any, and costs. This can extend to third parties as well, with the same limitations.

The operative test as to what constitutes a liquidated demand is expressed in Standard Oil Co. of B.C. Ltd. v. Wood (1964)^[3]:

“A liquidated demand in the nature of a debt, i.e., a specific sum of money due and payable under or by virtue of a contract. Its amount must either be already ascertained or capable of being ascertained as a mere matter of arithmetic. If the ascertainment of a sum of money, even though it be specified or named as a definite figure, requires investigation, beyond mere calculation, then the sum is not a ‘debt or liquidated demand,’ but constitutes ‘damages.’

Therefore, a liquidated demand only if it is a “specific sum” which is either “already ascertained or capable of being ascertained as a mere matter of arithmetic”.^[4]

Therefore, default judgements can only be allowed for cases where the debt that is easily determined by simple arithmetic, as in for the completion of a simple contract.

An example of arithmetic in a default judgement can be one where $100,000 were provided as per a contract, and only 1000 square feet of tiles priced at $8 per a square foot was provided, and the project was not completed, therefore the remaining $92,000 is due and owing. Anything more complex than this would place this claim under the jurisdiction of a judge.

As per Rule 3-8(4), the definition of a liquidated amount also extends to interest, as interest is purely a mathematical calculation on the original debt owing as it is ascertainable and specified, usually as a percentage calculation. It is good practice to include a claim for interest under the Court Order Interest Act^[5] when there was no interest defined in the contract between the parties.

Other Claims

Issues arise when trying to obtain a default judgement for unliquidated claims, these are amounts that are not fixed by an account, nor ones ascertained by a simple calculation. Tort claims pleading non-pecuniary damages for “pain, suffering, loss of enjoyment of life and loss of amenities,^[6]” damage to property, punitive (punishment for wrongdoing) cannot be secured with a default judgment alone and the plaintiff must prove their claim for damages.^[7]

If the claim against a defendant is neither specified nor ascertainable at the time of the claim, under Rule 3-8(5) the plaintiff may still obtain a default judgement against the defendant. However, when a client is asserting claims and requesting these sorts of damages in their pleadings, it is key to inform the client that the process will be longer, because even if the judgement has been obtained, an Assessment of Damages would be required.^[8]

The Assessment may include expert evidence, witnesses, and documentary evidence. It is exceedingly rare for general damages to be awarded for inconvenience, mental distress or punitive damages in contract cases outside of insurance, employment and intellectual property cases where these sorts of damages can be demonstrably justified.^[9]

As per Rule 3-8(6) of the SCCR, the plaintiff’s claim with respect to a default judgment can also include detention of goods, require the delivery of the goods, have the value of the goods be assessed at a later date, and costs. As the value of the goods can be ascertained (even if it has to be a later date), they are treated as liquidated assets and under the jurisdiction of a Registrar to allow a default judgement. Shares of a company may appear to be assets that can be detained, however their actual value would also have to be assessed prior to the payment order being made.

It is important to inform the client of these additional steps, and the time and money that might be required to complete a claim. If the client is already tight on funds, the assessment process can extend the claim into the years.

It is also important to take note if the claim pleads damages in a liquidated amount and makes an alternative claim for damages in an unliquidated amount, default judgment could still be available for the liquidated amount.^[10] You may still obtain default judgment on a claim for the money that is in a specific ascertainable amount, and the SCCR do not preclude a party from doing so where the claim is coupled with a claim in the alternative. In the case of Global, the amounts held as security in the court that was determined to be ascertained were released on default judgement, however the amounts that required further assessment remained in the courts.^[11]

As stated by Justice Weatherill in Interior Lumbermen’s Pension Plan (Trustees of) v. Moore, 2016 BCSC 89:

“Where the former rule referred to a claim “solely for recovery of a debt or liquidated demand”, Rule 3-8(3) refers to an action that “includes a claim for recovery of money in a specified or ascertainable amount”. The language in the old rule is exclusive; the language in Rule 3-8(3) is inclusive.”

Third-Party Claims

A defendant may commence a third party proceeding against any person, whether or not that person is a party to the action, if the party alleges one or more of the matters set out in SCCR 3-5(1):

a) The party is entitled to contribution or indemnity from the third party;

b) The party is entitled to any relief against the third party relating to or connected with the original subject matter of the action; or

c) A question or issue relating to or connected with any relief claimed in the action, or with the original subject matter of the action, is substantially the same question or issue as between the party and the third party and should properly be determined in the action.

If the defending third party, who have been provided a third-party notice, does not file a response to the notice within 42 days after being served, the party that issued the third-party notice can apply for default judgment as per Rule 3-5(16) of the SCCR.

Default judgment against third parties are given the same reverence as those against a defendant, and can be struck out if there is a meritorious defence.^[12]

Need Help With Your Legal Claim?

If you’re navigating a legal claim and aren’t sure if you qualify for a default judgment—or if you’re facing complications with liquidated or unliquidated claims—reach out to us today. Our experienced legal team can help you assess your case, explain your options, and guide you through the process to ensure the best possible outcome.

[1] Rule 3-8(1), Supreme Court Civil Rules (the “SCCR”).
[2] Miracle Feeds v. D. & H. Enterprises Ltd. (1979), 10 B.C.L.R. 58 (B.C. Co. Ct.) at 61
[3] Standard Oil Co. of B.C. Ltd. v. Wood (1964)47 W.W.R. 494 at p. 497 (B.C. Co Ct.), cited in Busnex Business Exchange Ltd. v. Canadian Medical Legacy Corp., 1999 BCCA 7, para 8 (“Busex”).
[4] Busex, para 9.
[5] (RSBC 1996) Chapter 79.
[6] Jackson v. Lai, 2007 BCSC 1023 (B.C. S.C.) at para. 134.
[7] Besic v Kerenyi, 2011 BCSC 1277 at para 7.
[8] Rule 3-8(12),(13) of the SCCR.
[9] Evocation Publishing Corp v Hamilton, 2002 BCSC 1797.
[10] Global Fleet Management Inc. v. Deltaura Canada Inc., 2020 BCSC 1938 (“Global”).
[11] Global para 16.
[12] Crosato v. George (1984), 6 C.C.L.I. 316 (B.C. S.C.).

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Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. While we strive to provide accurate and up-to-date information, every legal situation is unique. For personalized legal advice tailored to your specific case, please consult with a qualified lawyer. We are happy to assist you with your legal needs, but this post should not be relied upon as a substitute for professional legal counsel.