Executive Summary: Key Legal and Evidentiary Issues

• Dispute centres on a contractor’s allegedly inflated invoices (about 40% overcharging) for work performed for a condominium corporation.
• Default judgment for $115,370.33 was obtained without notice while defence counsel involvement and consent terms for setting aside default were already in play.
• Plaintiff’s motion without notice failed to disclose material facts, including prior discussions and conditional consent to set aside the noting in default, engaging Rule 39.01(6) obligations.
• Defendant’s delay in defending was linked to counsel’s non-response and condominium governance paralysis, rather than indifference, and the proposed defence had an “air of reality.”
• Court weighed prejudice and the integrity of the administration of justice, emphasizing that disputes should be resolved on their merits and criticizing strategic use of default judgment rules.
• Professionalism and civility principles were applied to condemn sharp practice in seeking default judgment without warning and without full disclosure, impacting both the setting aside of judgment and the costs outcome.

Facts of the case
Patrick O’Donnell, operating as JPT Contracting, provided contracting services to York Condominium Corporation 82, a residential condominium corporation in Ontario. The contractor issued invoices totalling $108,398 for work performed at the condominium. The condominium corporation later alleged that these invoices were improperly inflated by approximately 40%, contending that the proper charge should have been around $77,427, resulting in a claimed overcharge of about $30,970. The underlying dispute therefore concerned whether the contractor had overbilled the condominium corporation for construction or maintenance work, and whether the invoiced amounts accurately reflected the work done.

Procedural history and default judgment
The plaintiff commenced an action and served the statement of claim on October 29, 2024. When the defendant failed to deliver a statement of defence within the prescribed time, the plaintiff noted the defendant in default on December 5, 2024. On January 9, 2025, a lawyer for the defendant (not the counsel who ultimately argued the motion) wrote to plaintiff’s counsel. She advised that she was in the process of being retained, that the defendant intended to defend the action, and that she needed time to review the claim. She invited plaintiff’s counsel to raise any difficulty with that request and also asked whether settlement was possible, with a view to avoiding unnecessary costs. Later that day, plaintiff’s counsel informed defence counsel that the defendant had already been noted in default. Defence counsel then asked plaintiff’s counsel to consent to the late delivery of a statement of defence and warned that, if forced to bring a motion to set aside the noting in default, the effect would be to delay the plaintiff’s own claim. On January 22, 2025, plaintiff’s counsel replied that the plaintiff would consent to an order setting aside the noting in default, provided the defendant paid $1,431.22 in “costs thrown away.” No response was ever received to that email. From the condo corporation’s perspective, its failure to defend on time flowed from a mix of its lawyer’s non-response to that conditional-consent email and internal governance problems on the board that effectively paralysed its decision-making.

The default judgment motion without notice
On April 1, 2025, without further communication with the defence, the plaintiff moved without notice for default judgment. The motion was first refused because the sum of the invoices pleaded in the statement of claim did not match the amount of judgment sought. On May 16, 2025, the plaintiff filed a supplementary affidavit explaining the discrepancy. On June 12, 2025, Christie J. granted default judgment in favour of the plaintiff for $115,370.33, plus pre-judgment interest and costs. Critically, in bringing the motion without notice, the plaintiff did not disclose that the defendant had already consulted a lawyer, that there had been communications between counsel, or that plaintiff’s counsel had offered to consent to setting aside the noting in default, subject only to payment of costs. The plaintiff also did not serve the defendant with a copy of the judgment once it was obtained. The judgment only came to the attention of the condominium corporation months later, on November 7, 2025, when it received a copy of the judgment and a notice of garnishment by ordinary mail.

Standards for setting aside default judgment
Justice S.T. Bale reviewed the Ontario Court of Appeal’s decision in Mountain View Farms Ltd. v. McQueen, which sets out the key factors for setting aside default judgments. Those factors include: whether the motion was brought promptly once the defendant learned of the judgment; whether there is a plausible explanation for the failure to deliver a defence on time; whether there is an arguable defence on the merits; the prejudice to each side depending on the outcome of the motion; and the impact of the order on the integrity of the administration of justice. The judge emphasized that these factors are not rigid prerequisites. A strong arguable defence, for example, may justify setting aside a judgment even if other factors are only partly met. In this case, the defendant moved promptly once it learned of the default judgment, immediately retaining counsel who sought consent to set it aside, and then bringing the motion when consent was refused.

Merits of the defence and prejudice analysis
On the merits, the condominium corporation’s proposed defence was that the contractor’s invoices had been inflated by approximately 40%. Using the plaintiff’s own numbers, the court noted that if $108,398 represented 140% of the proper amount, the reasonable charge should have been about $77,427, leaving an overcharge of roughly $30,970. The court held that this evidence was sufficient to meet the “air of reality” threshold required at this procedural stage. If the default judgment were not set aside, the defendant would have no opportunity to prove that it had been significantly overcharged. By contrast, if the judgment were set aside, the plaintiff’s main prejudice would be delay. The judge observed that the plaintiff could have mitigated that delay by notifying the defendant of the intention to seek default judgment and by promptly providing a copy of the judgment once it was obtained. Substantive prejudice to the plaintiff was therefore limited, while the prejudice to the defendant from an unchallenged default judgment was considerable.

Integrity of the administration of justice and professional obligations
Justice Bale placed significant weight on the integrity of the administration of justice. The court reiterated that civil claims should be resolved on their merits whenever that can be done fairly, and that judgments should not rest solely on technical defaults where a real defence exists. The decision drew on case law cautioning against using default judgment rules for tactical advantage, especially when counsel on both sides are engaged and discussing pleadings and timelines. The court cited authority emphasizing that resorting to default procedures in such circumstances can generate unnecessary motions to set aside defaults, undermining efficient, affordable, and fair resolution of disputes. Professional standards were also central to the reasoning. The court referred to The Advocates’ Society’s Principles of Civility and Professionalism, which state that, subject to applicable rules, counsel should not seek a default or dismissal without first notifying known opposing counsel. It also referenced Rule 7.2-2 of the Law Society of Ontario’s Rules of Professional Conduct, which requires lawyers to avoid “sharp practice” and prohibits taking advantage of slips or irregularities that do not go to the merits or sacrifice the client’s rights. In this case, once plaintiff’s counsel knew that the defendant had retained a lawyer and had been offered consent to set aside the noting in default, she had a professional obligation to clarify whether the defence had truly been abandoned and to warn that default judgment would be sought. Moreover, because the motion was brought without notice, Rule 39.01(6) of the Rules of Civil Procedure required full and fair disclosure of all material facts. The court held that material facts plainly included the prior communications between counsel, the offer to consent to setting aside the noting in default conditional on costs, and the fact that the defendant had engaged counsel. Had those facts been disclosed, Christie J. might well have required that the motion proceed on notice rather than ex parte.

Outcome of the motion and the costs award
For all these reasons, the court ordered that the default judgment in favour of the plaintiff be set aside, allowing the condominium corporation to defend the action on the merits. As the successful party on the motion, the defendant became entitled to costs, subject to a set-off for the plaintiff’s “costs thrown away” arising from the defendant’s initial failure to deliver a defence. The defendant sought $9,051.30 in partial indemnity costs, but Justice Bale found that amount excessive. The figure included fees for a cross-examination of the plaintiff that the court considered unnecessary, and the overall request was viewed as disproportionate to both the amount truly in dispute (an alleged overcharge of about $30,970) and the relative simplicity of a motion to set aside default judgment. The court therefore fixed the defendant’s reasonable partial indemnity costs at $6,000. Separately, the court held that the plaintiff was entitled to $1,000 in costs related to the original noting in default up to January 22, 2025, when the conditional consent email was sent, and that this $1,000 would be set off against the defendant’s $6,000. The net result was an order that the plaintiff pay the defendant $5,000 in costs. No substantive damages or final monetary award on the underlying construction billing dispute were determined in this decision, because the earlier default judgment of $115,370.33 was explicitly set aside and the claim will now proceed to be decided on its merits.