Executive Summary: Key Legal and Evidentiary Issues

• Default judgment for breach of an Agreement of Purchase and Sale failed because the plaintiff’s damages case was supported only by a law clerk’s hearsay affidavit.
• Affidavit evidence on a default judgment motion must be based on personal knowledge or properly framed information and belief, and cannot rely on contentious hearsay or double hearsay to prove disputed damages.
• The law clerk’s affidavit contravened Rules 4.06 and 39.04 by omitting the basis of belief and attempting to prove the truth of attached documents solely through exhibits.
• Ontario case law restricts information-and-belief affidavits (especially from lawyers and law clerks) to non-contentious matters and requires sworn evidence from the authors of key documents relied on.
• Although liability was deemed admitted by the defendant’s default under Rule 19, the court emphasized that damages and declaratory relief still require admissible evidence, not just pleadings or deemed admissions.
• The motion was dismissed without prejudice, underscoring the need for properly admissible, non-hearsay evidence to obtain both money judgments and declaratory orders on a default basis.

Background and parties

This case arises from a failed real estate transaction between Starlish Home Corp., as plaintiff vendor, and Thuy Phuong Tam Nguyen, as defendant purchaser. The plaintiff alleged that the defendant breached an Agreement of Purchase and Sale (APS) for a property and commenced an action on December 23, 2024. The claim sought a declaration that the defendant had breached the APS, forfeiture of the deposit characterized as a “true deposit,” and damages including punitive damages flowing from the alleged breach. The defendant did not defend, and was noted in default, prompting the plaintiff to seek default judgment.

Relief sought on the motion

On the motion, the plaintiff asked the Ontario Superior Court of Justice to grant default judgment on its statement of claim. The relief included a judicial declaration that the defendant had breached the APS, confirmation of the forfeiture of the deposit, and an award of damages. Because the defendant had been noted in default, the plaintiff relied on the deemed admissions of fact in the pleading, coupled with an evidentiary record consisting of a single affidavit from a law clerk at plaintiff’s counsel’s firm.

The evidentiary record and use of hearsay

The plaintiff’s motion material consisted primarily of an affidavit sworn by Ms. Craven, a law clerk employed by the plaintiff’s lawyers. That affidavit attempted to establish key facts about the transaction, including the amount and characterization of the deposit, the terms of the APS and any extensions, and the plaintiff’s alleged mitigation efforts after the transaction collapsed. The affidavit annexed a number of exhibits, such as the Agreement of Purchase and Sale, extension agreements, and a mitigation of sale document, and made assertions about their content. The court found that the affidavit was based largely on hearsay and double hearsay on material, contentious facts. It did not adequately set out the sources of information and the fact of the law clerk’s belief, as required by the Rules of Civil Procedure. The affidavit also purported to establish the truth of the contents of documents merely by attaching them as exhibits and referring to them, without sworn evidence from the authors or other witnesses with personal knowledge.

Rules on affidavits and information-and-belief evidence

Justice Ramsay reviewed the requirements in subrules 4.06(1)(d) and (2) of the Rules of Civil Procedure. Those provisions confine affidavits to facts within the deponent’s personal knowledge or to other evidence the deponent could give if testifying as a witness, with limited room for information-and-belief statements on non-contentious matters where the source and the fact of belief are clearly disclosed. The court held that much of the law clerk’s affidavit was “presumably based on information and belief,” but it failed to specify the fact of belief and the sources in compliance with rule 39.04. That defect was viewed as fatal in light of the authority in Katz v. Katz, which stresses that such omissions can undermine the admissibility and weight of the evidence. The court further reiterated that attaching documents such as letters, emails, or agreements to an affidavit does not convert their contents into sworn evidence. Citing Katz and Sears v. Coristine, Justice Ramsay emphasized that where the truth of a document’s contents is central to the relief sought, the court should at a minimum require an affidavit from the document’s author attesting to its contents.

Case law limiting contentious hearsay from lawyers and clerks

Justice Ramsay placed the decision in the context of existing Ontario authority restricting the role of lawyers and law firm staff as witnesses on contentious matters. Relying on R. v. Chan and CPC International Inc. v. Seaforth Creamery Inc., the court reaffirmed that statements based on information and belief in affidavits should be restricted to non-contentious issues. The endorsement also referred to Myers J.’s guidance in Ferreira v. Cardenas and Master MacLeod’s comments in Mapletoft v. Service about the limited circumstances in which affidavits from counsel and clerical staff are appropriate. It was noted that clerical staff might occasionally adduce non-contentious documentary evidence (such as routine correspondence), but using a law clerk’s affidavit to transmit contentious information-and-belief evidence from lawyers or others diminishes weight and should be discouraged. In this case, the law clerk’s evidence went further by asserting legal conclusions, such as that the deposit was a “true deposit” and “therefore non-refundable in the event of any breach by the Purchaser,” which the court treated as an impermissible attempt to prove contentious matters through hearsay and legal argument embedded in an affidavit.

Default judgment, deemed admissions, and the need for proof of damages

Although the defendant had been noted in default, the court drew a clear distinction between deemed admissions of liability and proof of damages. Under rule 19.02(1), a defendant noted in default is deemed to admit the facts pleaded in the statement of claim. Rule 19.05 permits a plaintiff to move for judgment against such a defendant, but rule 19.05(2) requires that the motion be supported by affidavit evidence. The court relied on the Elekta v. Rodkin framework, which asks whether the deemed admissions alone entitle the plaintiff to judgment, and if not, whether the plaintiff has adduced admissible evidence which, taken with those admissions, justifies a judgment for the pleaded claim. Justice Ramsay accepted that liability was effectively admitted by default but held that the plaintiff had not discharged its burden to prove damages through admissible, non-hearsay evidence. In addition, the plaintiff sought declaratory relief regarding breach of contract and the nature of the deposit. The court cited B2B Bank v. Batson and Bank of Montreal v. Mathivannan to underscore that judicial declarations should be based on examined, admissible evidence rather than on deemed admissions or consent alone. Since the supporting affidavit was defective and largely hearsay on material issues, the evidentiary threshold for both damages and declaratory relief was not met.

Policy or contract terms and clauses at issue

The dispute centered on an Agreement of Purchase and Sale, rather than an insurance or other policy document. The decision notes that the plaintiff characterized the deposit under the APS as a “true deposit” that would be non-refundable in the event of any breach by the purchaser, and that there were extension agreements and mitigation documents appended to the law clerk’s affidavit. However, the endorsement does not reproduce or analyze specific contractual clauses of the APS in detail. Instead, the court’s focus remains on evidentiary sufficiency: because the plaintiff attempted to prove the nature of the deposit and its entitlement to retain it through a hearsay affidavit and unsworn exhibits, the judge declined to make findings about those contractual terms or enforce them by way of default judgment. Thus, while the APS and its deposit provisions are at the heart of the underlying dispute, they are not substantively interpreted in this decision; the ruling turns on procedure and evidence, not on a clause-by-clause contractual analysis.

Outcome and implications

Justice Ramsay dismissed the plaintiff’s motion for default judgment, without prejudice to Starlish Home Corp. This means the plaintiff retains the ability to renew its request for judgment if it can marshal proper admissible evidence, such as affidavits from individuals with personal knowledge of the transaction and sworn statements from the authors of key documents. The defendant, Ms. Nguyen, is effectively the successful party on this motion because the requested default judgment, including the declaration of breach, confirmation of deposit forfeiture, and monetary damages, was not granted. No damages, costs, or other monetary relief were ordered in this endorsement, and the decision does not specify any amount awarded to any party. As a result, the total monetary award, including costs and damages, in favor of the successful party cannot be determined from this decision and in practical terms remains at zero for this stage of the proceedings.