The Importance of Choosing the Right Registered Office

When incorporating a new company, sometimes individuals overlook the importance of their choice of registered office.

Per the Business Corporations Act, RSA 2000 c B-9, and the Alberta Rules of Court, A/R 124/2010, one of the ways service of legal documents can be affected on a corporation is by having those documents delivered to a corporation’s registered office. In Alberta once a statement of claim has been served on a defendant, typically the defendant only has 20 days to file a statement of defence.

If a defendant fails to file a statement of defence on time, the defendant is then “Noted in Default” and the plaintiff is able to get a “Default Judgment” against the defendant, which can be enforced against the defendant in the same manner as a regular judgment.

Sometimes defendants are able to apply to the Court to have a default judgment set aside. To do so, defendants have to be able to show that either:

1.      There was a procedural flaw, such as the plaintiff serving the claim in an improper way; or

2.      They meet the requirements of the three-part test set out in Palin v Duxbury, 2010 ABQB 833, at para 21, which are:

a.      That the defendant has an arguable defence;

b.      That the defendant did not deliberately let judgment go by default and has a valid excuse for the default; and

c.      That after learning of the default, the defendant moved promptly to have it set aside.

Generally speaking, if a defendant has an arguable defence and moves quickly to deal with the matter, default judgment will be set aside provided the defendant has a valid excuse for the default. A valid excuse for the default could be the defendant miscalculating the numbers of days they had to file their statement of defence or a family emergency or illness on the part of the defendant or their lawyer which prevents the defendant from attending to the filing their statement of defence in time

However, in a recent case, Lenkewich v Strongbuilt Homes Ltd., 2024 ABCJ 238, the Court upheld the default judgment which had been granted to the Plaintiff. In this case the Defendant’s excuse for the default was that he did not personally pick up the registered mail sent to his registered office containing the statement of claim and that once the registered mail had been picked up, he did not open it.

The Court found that this was not a valid excuse for the default and upheld the default judgment which had previously been granted to the Plaintiff in the amount of $53,299.50. The Court also ordered the Defendant to pay the Plaintiff an additional $1,200.00 for as costs for his unsuccessful application to set default judgment aside.

Regardless of whether there is any intention to avoid a claim or delay litigation, using a director or shareholder’s home address as a corporation’s registered office can result in default judgment being granted against a corporation in situations where a statement of claim is posted on an entrance to the house not used by the homeowners, and therefore goes unnoticed, or where the notice of registered mail is ripped off an exterior door by strong winds, and therefore the registered mail containing a statement of claim is never picked up. Both of these examples are real situations which resulted in default judgment being granted against unsuspecting defendants.

Even if you are able to set aside default judgment, you might only find out about the default judgment against your company after writs have been registered against the corporation, which could cause issues if you are trying to obtain financing for your company, or after funds have been garnished from your corporation's bank account or important equipment has been seized by a civil enforcement agency, which could cause issues for your ongoing operations.

One of the many corporate services offered by Alberta Counsel is acting as your registered office. If a statement of claim is served against your company at our office, your lawyer at Alberta Counsel will get in contact with you to inform you of the claim and work with you to ensure a statement of defence is filed on your behalf before your deadline to do so expires and help you to avoid the, potentially permanent, consequences of default judgment.

If you are interested in changing your corporation’s registered office, incorporating a new company, or need assistance in having a default judgment set aside, please do not hesitate to contact our office.