How to Set Aside a Default Judgment in PEI Small Claims Court

You missed the response deadline, the clerk noted you in default using a Notice of Default (Form 11C), and now there is a default judgment against you. Maybe you never received the claim, maybe life got in the way, or maybe you assumed the dispute would resolve itself. Whatever happened, the Supreme Court of PEI, Small Claims Section allows you to apply to have that default judgment set aside under Subrule 11.06 of Rule 74 — but you need to move quickly and meet a specific legal test.

What Happens When You're Noted in Default

Once the clerk notes you in default using Form 11C, Subrule 11.05 bars you from filing a Statement of Defence or taking any other procedural step without the plaintiff's consent or leave of the court, except that you may bring a motion under Subrule 11.06 to set aside the default. You generally do not receive notice of other steps in the case, except for service of the Notice of Default Judgment (Form 11B), amendments to the Statement of Claim or Defence, post-judgment proceedings, and written reasons from the judge or Prothonotary.

For a liquidated debt — a fixed dollar amount like an unpaid invoice — the clerk may enter default judgment under Subrule 11.02(1). No hearing is required for this clerk-entered judgment, and the clerk serves a Notice of Default Judgment (Form 11B). For unliquidated damages, such as a property damage claim where the amount is contested, the plaintiff may file a written motion for an assessment of damages (Forms 15A and 15B) or request a trial. A judge or the Prothonotary determines the amount. Either way, you are locked out of the process unless you apply to set the default aside.

The Two-Part Test Under Subrule 11.06

PEI courts will set aside a default judgment only if you satisfy both prongs of the test. Missing either one and the application fails.

Prong 1: An arguable defence on the merits plus a reasonable explanation for the default. You do not need to prove you will win — you need to show that your defence has enough substance that it deserves a hearing. At the same time, you must explain why you did not file your Form 9A within the 20-day deadline (or 40 days if served outside PEI). Common explanations that courts have accepted in similar jurisdictions include: the claim was served at a former address and you never actually received it; a serious illness or family emergency prevented you from responding; or you reasonably but mistakenly believed the matter was being settled informally.

Prong 2: You acted promptly after learning of the default. The court looks at whether you brought the motion as soon as reasonably possible after becoming aware of the judgment. If you discovered the default judgment three months ago and only now filed your motion, that delay works against you. The moment you learn about the judgment — whether through a garnishment notice, a letter from the court, or a credit report — that is when the clock starts ticking on promptness.

What Forms to File

Your application package includes:

• Notice of Motion (Form 15A): This is your formal request asking the court to set aside the default judgment and the noting in default. Specify what orders you are seeking — typically the set-aside itself, permission to file a late Statement of Defence, and an interim Stay of Enforcement if the plaintiff has already started collecting.
• Affidavit (Form 15B): A sworn statement setting out the facts. Cover three things: (1) the circumstances that caused you to miss the deadline, (2) when and how you became aware of the default judgment, and (3) a summary of your proposed defence — the factual grounds you would raise if allowed to file Form 9A.
• Draft Statement of Defence (Form 9A): Consider attaching a completed Form 9A as an exhibit to your affidavit. This shows the court the defence you intend to file, which goes directly to the arguable-defence requirement.

File these at the court registry where the original claim was issued — the Sir Louis Henry Davies Law Courts in Charlottetown (42 Water Street) for Queens/Kings County matters, or the Prince County Court House in Summerside (108 Central Street) for Prince County matters. Electronic filing to [email protected] is available with a Request to File Electronically form attached.

Serve a copy of your complete motion package on the plaintiff or their lawyer at least seven days before the hearing date.

Enforcement Does Not Automatically Stop

Filing the set-aside application does not pause enforcement. If the plaintiff has already obtained a garnishment of your wages or bank account, or filed a Writ of Execution with the Sheriff's Office, those enforcement actions continue unless you get a specific order stopping them.

Include a request for an interim Stay of Enforcement in your Notice of Motion. Without it, you could be fighting to reopen the case while your paycheques are being garnished. The court has discretion to grant the stay, and your chances improve if your motion materials show the merits and promptness requirements are met.

What Happens If the Set-Aside Is Granted

If the court grants your application, the default judgment is set aside and the case returns to the defended track. You file the Statement of Defence, and the court clerk will schedule a mandatory Settlement Conference — it must be held within 60 days after the first Statement of Defence is filed, unless the Prothonotary orders otherwise. From there, the standard process applies: the 10-day pre-conference document disclosure deadline, the settlement conference itself with the Prothonotary, and if no resolution, a trial.

The court may attach conditions to the set-aside order, such as a deadline to file your defence or an order to pay the plaintiff's costs thrown away by the default proceedings.

If the Set-Aside Is Refused

If the court decides you have not met the two-part test — either your explanation for the default is not satisfactory, your proposed defence is not arguable, or you waited too long to bring the motion — the default judgment stands. If the refusal is by the Prothonotary, Rule 74.13.06 allows an appeal to a judge; serve a Notice of Appeal (Form 62A) within 30 days of the order. For a judge's refusal, ask a lawyer promptly about any appeal rights and deadlines.

Getting Help

If you are unsure whether your situation meets the Subrule 11.06 test, Community Legal Information PEI (CLI) offers free legal information. The CLI Lawyer Referral Service can connect you with a lawyer for up to 45 minutes of advice for a $25 fee. For a complete walkthrough of the entire response process — including the defence forms, deadline calculations, settlement conference prep, and what to expect at the hearing — the PEI Small Claims Response Guide covers every step from the moment you are served to the final decision.

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