Executive Summary: Key Legal and Evidentiary Issues

• Validity of a default judgment where the defendant corporation attempted to act through an administrator instead of a lawyer and then sought retraction on the basis of ignorance of the law and alleged surprise.
• Effect of the defendant’s failure to comply with a court order to present a motion for transfer of venue within a strict deadline, and whether later inaction amounts to negligence barring retraction.
• Interaction between the principle of the irrevocability of judgments and the defendant’s right to be heard, in the context of article 347 C.p.c. and the three conditions for retraction of a default judgment.
• Seriousness of the asserted defences relating to alleged late deliveries of stone, additional site-management costs, and potential liquidated damages to the project owner, and whether such defences justify reopening the case.
• Relevance of an unsigned “Terms and conditions” document and the supplier’s waiver of a 20% penalty clause, including whether that clause can still ground a dispute when the penalty has been expressly renounced in the default judgment.
• Consequences of a party’s sustained negligence in managing its file, including not pursuing a transfer motion, not regularising representation by counsel, and not acting after learning of default, on its ability to invoke the right to a full defence.

Factual background

Les Carrières Ducharme inc. supplied cut stone to Construction G.E.L.F. inc. (GELF) for a municipal construction project, namely the rehabilitation of the Parc de la Place des Jumelages in Anjou, for which the City of Montréal was the project owner. GELF received from Carrières Ducharme a price list for the stone and a separate document entitled “Termes et conditions”. It signed the price proposal and a purchase order for the material but did not sign the “Termes et conditions” document. On that basis, GELF later argued it was not bound by certain contractual conditions, including a 20% penalty on unpaid amounts. The relationship deteriorated over alleged delivery delays. GELF claimed that Carrières Ducharme did not respect the agreed delivery schedule, causing it to miss construction deadlines. According to GELF, the late deliveries generated additional mobilisation, team rescheduling and coordination costs on site totalling 19 979,33 $, and exposed it to potential liquidated damages of 1 000 $ per day of delay under its contract with the City of Montréal. Although GELF asserted that such amounts should be offset against what it owed for the stone, it did not quantify the possible contractual penalty from the City, nor did it specify the number of days of alleged delay attributable to Carrières Ducharme’s deliveries.

Procedural history

Carrières Ducharme commenced an action in the Civil Division of the Court of Québec, Montréal District, to recover unpaid amounts for the stone supplied. The originating application was served on GELF on 27 August 2025. Instead of instructing a lawyer, one of GELF’s directors, Guy Hénault, personally signed and filed a letter and a notice of a preliminary application seeking to have the case transferred to the Longueuil district. Because GELF is a corporation, it was required under article 87 of the Code of Civil Procedure (C.p.c.) to be represented by counsel. Nonetheless, the court office accepted this preliminary notice even though it was not signed by a lawyer. On 26 September 2025, after examining the transfer request, the Court ordered GELF to present its motion for transfer in practice court. The decision stipulated that the party seeking the transfer must serve a notice of presentation in civil practice court within ten days of the decision, giving GELF until 9 October 2025 to proceed. This decision was emailed to Mr. Hénault on 6 October 2025. Despite this, GELF never followed through with a duly presented transfer motion. On 9 October 2025, Carrières Ducharme filed a request for inscription for default judgment. It did not notify GELF or Mr. Hénault of this step. The Court rendered a default judgment on 18 February 2026, partially granting the supplier’s claim and condemning GELF to pay 44 218,94 $. In doing so, the Court recorded that Carrières Ducharme had renounced the 20% penalty on the amount of its debt, so that penalty was not included in the award. After the default judgment, GELF took steps to regularise its position. It asserted that it retained a lawyer on 17 February 2026, but by then the case had already been inscribed for default, which prevented immediate filing of a defence. GELF said its lawyer could not file a response because of that procedural posture. GELF claimed it only became aware of the default judgment on 2 March 2026. A motion to retract the judgment was notified to Carrières Ducharme’s counsel on 24 March 2026 and formally served on 27 March, and a response on behalf of GELF was filed on 30 March 2026.

Grounds for retraction invoked by GELF

GELF advanced several grounds in support of its application for retraction of the 18 February 2026 default judgment. First, it argued that it had not responded to the originating application because it was unaware that a corporation could not represent itself through its own directors. From its perspective, the fact that the court office had accepted its non-lawyer preliminary notice led Mr. Hénault to believe that he had validly seized the Court and that proceedings could continue on that basis. Second, GELF asserted that the Court had suspended the deadline to present the transfer motion until 30 November 2025, and that the procedural posture created confusion and surprise that impeded its ability to defend. Third, GELF faulted both the Court and Carrières Ducharme for not having expressly advised it that it had to be represented by a lawyer. It maintained that this alleged omission contributed to its being taken by surprise and prevented it from filing a defence in due time. Fourth, GELF stated that when it retained new counsel on 17 February 2026, the lawyer was unable to file a defence because the case had already been inscribed for default, and no steps to obtain relief from default or stay the proceeding were taken. Finally, GELF claimed that it only learned of the default judgment on 2 March 2026, after which it promptly initiated the retraction process within the delays set by article 347 C.p.c. As to the merits, GELF pointed to several defences it wished to raise. It denied owing the 20% contractual penalty, since it had never signed the “Termes et conditions” containing that clause. It also alleged significant delivery delays by Carrières Ducharme, leading to extra site-management and coordination costs of 19 979,33 $, and the risk of being charged 1 000 $ per day of delay by the City of Montréal. GELF argued that these amounts should be deducted from the balance otherwise payable for the stone.

Opposition of Carrières Ducharme to the retraction

Carrières Ducharme opposed the motion for retraction on both procedural and substantive grounds. On the legal plane, it argued that ignorance of the law is not a basis for retracting a judgment, particularly where the Code of Civil Procedure expressly imposes representation by counsel on legal persons. GELF’s alleged unawareness of article 87 C.p.c. could not, in its view, constitute “fraud, surprise or another cause judged sufficient” to justify retraction of a default judgment. Carrières Ducharme further pointed out that GELF had not respected the 26 September 2025 order requiring it to present its transfer motion by 9 October 2025 and had not explained this failure in its retraction motion. From the supplier’s standpoint, compliance with that order would have brought GELF’s obligation to proceed through counsel into sharp focus and would have given it a clear opportunity to regularise representation. Carrières Ducharme also highlighted that on or about 26 November 2025, a lawyer had written on behalf of GELF to signal interest in discussing the file. If that lawyer consulted the court docket, he would have seen that an inscription in default had been filed, yet no defence, no application for relief from default, and no transfer motion were presented, and no follow-up occurred. These facts were not disclosed in Mr. Hénault’s sworn declaration supporting the retraction. Carrières Ducharme further noted that when GELF’s current lawyer discovered the inscription in default on 17 February 2026, he still did not seek to have GELF relieved from default. No explanation was provided in the retraction materials for that omission either. For Carrières Ducharme, this pattern showed not surprise or impossibility to act, but a sustained and unjustified neglect of the file by GELF and its representatives.

Legal framework and court’s analysis on retraction

The Court began by recalling that the irrevocability of judgments is a fundamental principle of sound judicial administration, balancing the need for finality against the equally important right of parties to be heard and to present their case. Within the specific mechanism of retraction of a default judgment, the right to be heard will prevail where serious grounds exist and the statutory conditions are met. Under well-established jurisprudence, three cumulative conditions govern the retraction of a default judgment. First, the application for retraction must be filed and presented within the strict deadlines set by article 347 C.p.c. Second, the allegations must show that the party against whom default judgment was rendered was prevented from defending itself by fraud, surprise or another cause deemed sufficient. Third, the defendant seeking retraction must raise defences that appear to be arguable and serious on their face. In this case, the timeliness requirement was satisfied. The Court therefore examined whether GELF had been prevented from defending itself by a qualifying cause and whether its proposed defences appeared serious. On the first point, the Court held that ignorance of the law is not a ground opening the door to retraction. The fact that Mr. Hénault did not know that a corporation must respond through a lawyer could not in itself justify setting aside the default judgment. The Court did acknowledge that the court office should not have accepted the preliminary notice signed by Mr. Hénault personally and that this might have reinforced his impression that he had properly seized the Court. However, the judge found that Mr. Hénault gave no satisfactory explanation as to why he never complied with the 26 September 2025 order to present his transfer motion. The record showed that the form of judgment clearly indicated that the party seeking transfer had to notify a notice of presentation in civil practice court within ten days, and that the proceeding was suspended only to allow adjudication of that transfer request. Nonetheless, GELF never proceeded, whether by 9 October 2025, by 30 November 2025 (the date Mr. Hénault claimed to have understood as the ultimate deadline), or thereafter. The Court also attached importance to the fact that GELF had, around 26 November 2025, already retained counsel to discuss the file with Carrières Ducharme’s lawyer. The absence of any evidence as to that lawyer’s mandate, his review of the docket, or reasons for not filing a transfer motion or an application for relief from default led the Court to infer that GELF simply failed to take necessary steps. Similarly, after 30 November 2025, when Mr. Hénault’s own understanding was that he had to act by that date, he did nothing to move the file forward. All of this led the Court to conclude that GELF had, in effect, failed to manage its case. Established jurisprudence treats a party’s negligence in managing its own affairs and respecting procedural requirements as a bar to retraction. The judge therefore found that GELF had not shown that fraud, surprise or another sufficient cause had actually prevented it from defending.

Appreciation of the seriousness of GELF’s defences

Even though the first substantive condition was not met, the Court went on to consider the seriousness of GELF’s proposed defences, following appellate guidance that the more serious the defences, the more credible and acceptable the defendant’s explanations for default may appear. The Court accepted that some of GELF’s contentions were not frivolous. In particular, the allegations that Carrières Ducharme delayed stone deliveries by six weeks, that these delays generated additional site-management costs of 19 979,33 $, and that GELF might face liquidated damages of 1 000 $ per day of delay to the project owner were considered potentially serious. However, GELF had not quantified any actual penalty from the City of Montréal and had not specified how many days of delay were attributable to the stone deliveries. The City had not yet claimed any contractual penalty. As a result, the only concrete amount identified was the 19 979,33 $ in internal costs that GELF said it incurred in managing delays. The Court also noted the specific content of the default judgment: it expressly recorded that Carrières Ducharme had renounced the 20% contractual penalty for late payment, so that portion of the claim had been removed. Consequently, the existing judgment already aligned with GELF’s position that it did not owe that penalty. Moreover, the Court stressed that GELF did not deny owing Carrières Ducharme for the stone actually delivered. With the exception of its argument about the 20% penalty, it did not dispute the amount of the invoices. Instead, GELF argued that it had a claim against Carrières Ducharme for the damages allegedly caused by late deliveries. The Court observed that GELF remained free to institute separate proceedings to claim any indemnity it believed itself entitled to recover, including the 19 979,33 $ of internal costs and any eventual penalty it could be required to pay the City, provided it could establish the factual and legal basis for such a claim. That possibility reduced the necessity of reopening the original action through retraction of the default judgment.

Balancing the right to be heard and the finality of judgments

In addressing the competing principles at stake, the Court reiterated that the right to be fully heard is not without limits. A party that knows of existing judicial proceedings yet neglects to attend to them and fails, without explanation, to respect a date for presenting a motion it wishes to pursue can be regarded as having effectively renounced its right to be heard in that instance. A litigant cannot credibly claim impossibility to act where it has been negligent in following judicial procedure. Drawing on prior authority, the Court held that although, in general, the right to a full defence should prevail over the principle of finality, this is not so where the party seeking retraction has, by its own negligence or misconduct, placed itself in a position where it can no longer convincingly rely on that right. In GELF’s case, the pattern of inaction—failure to comply with the transfer-motion deadline, absence of steps after retaining counsel in November 2025, and failure to seek relief from default even once the situation was known—amounted to such negligence. Against that background, and considering that GELF could still bring a separate claim for its alleged damages, the Court concluded that the principle of the irrevocability of judgments should prevail in this matter.

Outcome and monetary consequences

The Court rejected Construction G.E.L.F. inc.’s application to retract the 18 February 2026 default judgment. The earlier judgment in favour of Les Carrières Ducharme inc. therefore remains fully in force. That judgment condemned GELF to pay 44 218,94 $, a sum that already reflects Carrières Ducharme’s express renunciation of any 20% penalty for late payment. In the present decision, the Court also ordered that the retraction application be dismissed with costs of justice, meaning that GELF must bear the judicial costs associated with this proceeding, although the exact amount of those costs is not specified in the judgment and cannot be determined from its text. As a result, the successful party is Les Carrières Ducharme inc., with a principal monetary award of 44 218,94 $ plus recoverable court costs, the precise total of which is not quantified in the decision.