In McIlwain v. Len’s Cove Marina Ltd., 2025 ONCA 434, the Ontario Court of Appeal overturned a $138,000 default judgment after finding that the defendant, a marina, had a plausible excuse for not responding to a lawsuit and a legitimate defence worth hearing.
The dispute in this matter arose after the plaintiff purchased a new boat and trailer from the defendant. He later alleged the boat had serious structural defects and filed a claim seeking nearly $200,000 in damages. The Marina, relying on communications with the manufacturer believed the issue was being addressed under warranty. While the plaintiff rejected the proposed warranty repair (which required transporting the boat from Thunder Bay to the dealership), the defendant marina did not file a defence — and was eventually noted in default.
When the defendant learned of the default judgment months later, it promptly moved to set it aside. The motion judge refused, finding the delay unreasonable and the defence weak. However, the Court of Appeal disagreed. The Court of Appeal for Ontario held that the motion judge erred by weighing the evidence and assessing credibility at the motion stage, where only an “arguable defence” is required — not proof. The Court also found that the Marina’s reliance on the manufacturer’s plan to resolve the matter out of court was a plausible explanation for its inaction.
The Court stressed that the interests of justice often favour deciding cases on their merits. It noted that the defendant believed the warranty would cover the issue and that the manufacturer had a plan in place to repair the boat. Moreover, the plaintiff obtained the default judgment without notice, and the defendant had no opportunity to be heard. In these circumstances, the Court found it was just to allow the case to proceed and directed that the defendant be permitted to file a defence.
This decision in McIlwain v. Len’s Cove Marina Ltd highlights supports the fact that Ontario courts may be prepared to set aside default judgments where justice requires it. A missed deadline does not necessarily close the door if the defendant acts promptly, has a genuine explanation for the delay, and can show a defence with some merit. The Court emphasized that it is not enough to dismiss a case based on procedure alone — parties deserve the opportunity to have their dispute resolved on the merits.
Parties that have been noted in default or are seeking to commence default proceedings are encouraged to seek the aid of legal counsel. The lawyers at Gilbertson Davis LLP have experience with contract litigation, summary judgment and commercial disputes. Please contact us for an initial consultation.
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