Executive Summary: Key Legal and Evidentiary Issues

• Default judgment granted after defendants were noted in default and did not move to set aside or file a defence.
• Contractual liability established for unpaid electrical equipment, installation, and related services, including enforcement of two acknowledgment agreements.
• Fraud and negligent misrepresentation found where defendants falsely promised payment and security over assets, inducing continued credit and supply of services.
• Attempts to obtain broader equitable remedies (unjust enrichment, fraudulent conveyance, oppression, veil piercing, specific performance, and mandatory injunctions) were rejected as unnecessary, unsupported, or incompatible with full damages.
• Interest allocation distinguished between a contractual pre-judgment rate of 26.82% and a statutory post-judgment rate of 4%.
• Costs partially indemnified at $9,000 rather than full indemnity, with the court criticizing counsel’s justification for a full indemnity award.

Factual background

Studerus Electric Inc. is an electrical contractor based in London, Ontario, operated by its principal, Vincent Studerus. The company supplied electrical equipment, installation, and related services to the defendants over an extended period between 2022 and 2025. Many of these invoices were either unpaid or only partially paid, leaving a substantial outstanding balance owed to Studerus.

The primary corporate defendant, Eddjo Inc., carried on business as Strano Property Management. Its directing mind, David L. Strano, was actively involved in the relationship with Studerus and signed the key documents at issue both in his corporate and personal capacities. A second corporate defendant, Braxx Railings Inc., was also an Ontario corporation and became a signatory to the later acknowledgment agreement, thereby engaging it directly in the debt obligations.

As the arrears mounted, the parties entered into two written acknowledgment agreements, described in the reasons as AA1 and AA2. In these documents, the defendants expressly confirmed the existence and amount of the debt and agreed on terms to repay it. The acknowledgments were important because Studerus relied on them to continue extending credit and providing services; in other words, they functioned as both an admission of liability and a restructuring of the payment arrangements.

Both AA1 and AA2 contemplated security in the form of lists of assets to be provided by the defendants to secure the debt. Despite these undertakings, the defendants never supplied the promised lists of assets. The court found that this failure, in the context of continued assurances of payment, formed part of a pattern of conduct intended to delay enforcement and prolong Studerus’s exposure. Ultimately, the defendants did not live up to the repayment terms in AA1 and AA2, leaving the plaintiff with unpaid accounts and broken agreements.

Procedural posture and default

When suit was commenced, the defendants did not deliver a statement of defence and were formally noted in default. A prior judge, Garson J., gave the defendants an express opportunity to move to set aside the noting in default before the scheduled hearing of Studerus’s motion for partial default judgment. Despite that opportunity, the defendants took no steps to set aside the default.

On the motion date, counsel for the defendants attended and sought leave to make submissions, indicating that the defendants did not oppose the entry of default judgment for liquidated damages but wished to contest any findings of fraud and the granting of mandatory or equitable relief. Importantly, defence counsel had no instructions to bring a motion to set aside the noting in default.

The motion judge, Moser J., declined to grant leave to make submissions. The court held that the defendants had both notice and sufficient opportunity to respond, and that they had chosen not to pursue the procedural step of setting aside the default. As a result, the motion proceeded on the basis that the defendants remained in default and were deemed, under Rule 19.02(1)(a), to admit the material facts pleaded by Studerus.

Breach of contract and enforcement of the acknowledgment agreements

On the uncontested factual record arising from the default, the court found that the elements of breach of contract were clearly made out. Studerus had supplied electrical equipment, installation, and services for which the defendants were contractually bound to pay. The unpaid invoices, along with the terms of AA1 and AA2, established both the underlying obligations and the defendants’ continuing acknowledgment of that debt.

AA1 and AA2 were crucial in crystallizing the debt and its terms. By signing these agreements, the defendants confirmed the debt, agreed to payment schedules, and undertook to provide asset information as security. Studerus relied on these acknowledgments when it continued to extend credit and provide services into 2025. When the defendants failed to comply with the payment terms and did not provide the promised security, they breached both the original contracts for services and the subsequent acknowledgment agreements.

The court therefore held the defendants liable for all outstanding amounts under the unpaid invoices and the acknowledgment agreements. It ordered that these amounts carry pre-judgment interest at the contractual rate of 26.82%. While the reasons make clear that the contractual debt is “detailed and unopposed,” they do not specify the exact dollar value of that principal sum in the text of the decision.

Fraud and negligent misrepresentation findings

Beyond simple non-payment, the court accepted that Studerus had pleaded and established fraud and negligent misrepresentation. The defendants had repeatedly represented that they would pay their debts and would secure the obligations by providing lists of assets under AA1 and AA2. These assurances were found to be either knowingly false or made with reckless indifference to the truth.

Studerus relied on these representations when it continued to provide goods and extend credit. That reliance increased its exposure and financial losses, because it continued supplying services that it might not otherwise have provided had the true situation been known. The defendants’ repeated assurances about forthcoming security—lists of assets that were never produced—were particularly significant. The court characterized these promises as fraudulent, not simply careless or mistaken, and found that the defendants acted in a way that had the practical effect of delaying enforcement while more services were rendered.

On these facts, the court concluded that both the elements of fraudulent misrepresentation and negligent misrepresentation were satisfied. In addition, the court recorded an important insolvency-related consequence: the services were obtained by fraudulent misrepresentation, so the resulting debt would not be released by a discharge in bankruptcy under s. 178(1)(e) of the Bankruptcy and Insolvency Act. That finding places the debt in the category of obligations that can survive a bankruptcy discharge because they were incurred by fraud.

Equitable and statutory remedies that were rejected

Although Studerus succeeded on its core contractual and tort claims, the court declined to grant several additional forms of relief that had been advanced in the pleadings.

First, the court addressed unjust enrichment. Because there was a valid and enforceable contract governing the relationship and a damages remedy was being awarded under that contract, the judge held that it was unnecessary and inappropriate to analyze the dispute in unjust enrichment terms. The existence of a valid contract generally bars unjust enrichment claims covering the same subject matter, and that principle was applied here.

Second, Studerus advanced a claim under the Fraudulent Conveyances Act, presumably on the theory that certain transfers might have been made to defeat or hinder creditors. The court found that there was insufficient evidentiary foundation to support a fraudulent conveyance finding and therefore declined to grant relief on that basis.

Third, the plaintiff asked, in effect, for the corporate veil to be pierced to reach personal or related corporate assets beyond the direct obligors. The court reiterated the high threshold: veil piercing requires proof of complete control over the corporation and its use as an instrument of fraud. While fraud was established in relation to the misrepresentations, the judge concluded that it was not necessary to pierce the veil to achieve a just result in this case, given the liability findings already made and the remedies available against the named defendants.

Fourth, the plaintiff sought an oppression remedy, a statutory tool typically used in corporate law to address conduct that is oppressive or unfairly prejudicial to stakeholders such as shareholders or creditors. The court declined to grant oppression relief, noting that the dispute was essentially contractual and tortious in nature and that the existing remedies for breach of contract and misrepresentation were adequate.

Finally, Studerus sought equitable remedies such as specific performance and mandatory injunctive relief, in addition to full monetary damages. The court emphasized that a plaintiff cannot simultaneously obtain specific performance and full damages for breach of contract because the two remedies are conceptually inconsistent. An award of full damages treats the contract as terminated and compensates for its breach, whereas specific performance treats the contract as ongoing and compels its enforcement. For similar reasons, the request for mandatory injunctive relief, which would have compelled ongoing performance or specific acts, was found to be incompatible with a full damages award. The court therefore denied the equitable relief and confined the remedy to monetary damages and interest.

Interest structure and the treatment of the contractual rate

A notable aspect of the judgment is the distinction between pre-judgment and post-judgment interest. The parties had agreed contractually that the debt would bear interest at the rate of 26.82%. The court accepted and enforced this term for the pre-judgment period, holding that the defendants must pay the outstanding amounts with pre-judgment interest at that contractual rate.

However, the judge was careful to limit the reach of the 26.82% rate. There was no express contractual term extending that high rate into the post-judgment period. In the absence of such a clause, the court applied the usual statutory framework and set post-judgment interest at 4% under the Courts of Justice Act. This division underscores that even where parties agree to a high interest rate, courts may confine it to the pre-judgment phase unless the contract clearly provides otherwise for post-judgment interest.

Costs and the court’s approach to indemnity

Costs were contested. Counsel for Studerus argued that he charged a lower than typical hourly rate for a lawyer of his seniority, expressly to promote access to justice for mid-level corporate clients, and that this lower rate should be treated as effectively a partial indemnity rate. On that basis, he sought full indemnity of his fixed costs in the amount of $15,000.

The court rejected this reasoning in strong terms, describing the argument as unsupportable and inappropriate. It held that the fact a lawyer’s standard rate is lower than that of some peers does not automatically convert that rate into a partial indemnity measure warranting full indemnity recovery. Applying the usual partial indemnity approach, the court instead awarded costs of $9,000 to Studerus. This figure reflects the court’s view of reasonable, proportionate costs in light of the nature of the proceeding and the default posture of the defendants.

Outcome and overall result

In the final order, the court held the defendants liable for breach of contract and fraudulent misrepresentation. It ordered them to pay all outstanding amounts owing to Studerus Electric Inc. under the unpaid invoices and acknowledgment agreements, together with pre-judgment interest at the contractual rate of 26.82%. Because the contract did not extend that rate beyond judgment, the court imposed a post-judgment interest rate of 4% under the Courts of Justice Act. The judge also confirmed that the debt arises from fraudulent misrepresentation and therefore falls within the category of obligations that are not released by a bankruptcy discharge under s. 178(1)(e) of the Bankruptcy and Insolvency Act.

No insurance policy terms or clauses were discussed in the decision, and the case did not turn on the interpretation of any insurance policy wording. The focus remained on contractual obligations, fraud, misrepresentation, and related corporate and equitable issues.

The successful party was Studerus Electric Inc., which obtained judgment for the full outstanding contractual debt, contractual pre-judgment interest at 26.82%, statutory post-judgment interest at 4%, and an award of $9,000 in partial indemnity costs. The precise dollar amount of the principal debt and accrued interest is not specified in the reasons, so the total monetary sum of damages plus interest cannot be calculated from the decision text alone, though it is clear that these monetary remedies, together with the $9,000 in costs, were ordered in Studerus Electric Inc.’s favour.