A Missed Notice, a Default Judgment, and a Small Business in Milton

The situation

Zainab and Ayesha ran a small two-van delivery and moving business out of Milton. Zainab handled dispatch and driving; Ayesha, who worked full-time as a hairdresser, kept the books and handled paperwork most evenings after her shift. Between the two of them, the business was very much a side venture built around two other full-time jobs, run on evenings and weekends with the help of a rotating group of part-time labourers who helped with loading and unloading on busier days. One of those labourers was Sandro, a warehouse worker by trade, who picked up shifts with the business for about eight months before moving on to steadier full-time work elsewhere.

A few months after Sandro left, he started a claim in Small Claims Court for unpaid overtime and vacation pay, arguing he had regularly worked more hours than he was paid for and had never received vacation pay on top of his hourly wage. The claim was for about $27,000, which included the disputed wages along with an amount for what he said was insufficient notice when the work dried up and his shifts stopped being offered.

The problem was not the claim itself, which Zainab and Ayesha could have responded to and at least partly disputed if they had known about it. The problem was that the business had moved its mailing address about six months earlier, when Zainab relocated the small storage unit the vans operated out of, and never updated that address with the entity used to officially register the business. The court documents, including the claim itself and a later notice warning that default would be noted, were mailed to the old address. Nobody at the business ever saw either of them.

How the default happened

In Small Claims Court, a defendant who is served with a claim has a set period to file a defence. If no defence is filed, the plaintiff can ask the court to note the defendant in default, and from there can move to have default judgment entered — a judgment granted without a trial or hearing on the merits, simply because the other side did not respond in time.

That is what happened here. With no defence filed, Sandro's side had the business noted in default and then obtained default judgment for roughly $29,400 — the $27,000 claimed, plus prejudgment interest of about $900 for the time the claim had been outstanding, plus costs of about $1,500 that the court allowed for bringing the matter to judgment.

Zainab and Ayesha found out only when a collections letter arrived referencing a court file number neither of them recognized. By then, weeks had passed since judgment had been entered. Zainab called Treadstone Law the same afternoon, worried the business's bank account was about to be garnished, and unsure whether a judgment already entered by the court could even still be challenged at that point.

What we did

1. Confirmed the judgment and the deadline pressure. Our first step was pulling the court file to see exactly what had been claimed, when the claim was served, and what steps had been taken to note default and enter judgment. This confirmed the address problem and gave us a clear timeline to work from.
2. Prepared a motion to set aside the default judgment. A default judgment is not automatically final. A court can set it aside where the defendant has a reasonable explanation for missing the deadline, moved promptly once they learned of the judgment, and has an arguable defence worth putting before the court — not a certain winning defence, just one that deserves to be heard. We built the motion around all three: the stale address explained the missed deadline, Zainab had called within days of the collections letter, and the business disputed both the overtime hours claimed and whether vacation pay had genuinely gone unpaid, since some of it had been rolled into Sandro's hourly rate under an arrangement the parties had discussed at the time.
3. Gathered the pay documentation while the motion was pending. Wage disputes are won or lost on records. We had Ayesha pull together the pay records she had kept, including the notes she made when Sandro's rate was set, to support the defence the motion would need to show was genuine.
4. Attended the motion and negotiated terms. Courts routinely set aside default judgments in situations like this, but rarely for free. The judge set the judgment aside on terms: the business had to pay Sandro's costs thrown away — the costs he had already incurred getting to judgment, about $1,200 — within a short period regardless of how the underlying dispute turned out, and had to file its defence within a fixed number of days rather than the standard longer period a fresh claim would allow.
5. Moved the underlying dispute to a resolution. With the judgment set aside and a defence on file, the case was back to being an ordinary wage dispute rather than a collections problem. Rather than push the case toward a trial that would cost both sides more than the amount in dispute justified, we proposed a settlement discussion once the pay records were exchanged.

The outcome

The parties settled before a trial date was set. The business agreed to pay Sandro a total of $19,000, inclusive of the $1,200 in costs thrown away already paid under the terms of the set-aside order, leaving $17,800 owed on top of that. That figure sat well below the $29,400 default judgment and below Sandro's original $27,000 claim, but above what Zainab and Ayesha had initially hoped to pay, since the records did show some overtime had genuinely gone unpaid even after accounting for the vacation pay arrangement.

Neither side got everything they wanted, which is the honest description of most Small Claims settlements. Sandro accepted less than he had been awarded by default and less than he had originally claimed. The business paid more than it believed it truly owed, and also had to absorb the $1,200 in costs thrown away as the price of having missed the original deadline in the first place — a cost that would not have existed if the address had been current. But the business avoided the far larger risk of a trial on a $27,000 claim, avoided the immediate threat of a garnished bank account, and closed the matter within a few months of the motion rather than dragging it toward a hearing date that, in Small Claims Court, can sit many months out.

Zainab updated the business's registered address the same week the settlement was signed, and set a standing reminder to check it annually against the business's official filings.

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