Executive summary: key legal and evidentiary issues

• Block on Block Builders Inc. sued homeowners Abudu and Celestina Sule for $280,634.96 in damages for breach of contract, unjust enrichment, and quantum meruit over a residential construction dispute in Whistle Bend, Whitehorse, Yukon.

• The Sules counterclaimed for $98,526.04, seeking recovery of costs beyond the fixed contract price, rent and electricity expenses, mortgage interest, and loan repayment after terminating the contract due to alleged delays and deficiencies.

• A default judgment was obtained against Block on Block for failing to file a defence to the counterclaim, and the plaintiff's action was subsequently dismissed at an appearance day hearing where the plaintiff did not attend.

• Applying the three-part test from Evans v Bauman, the Court found that Block on Block's failures were attributable to negligence and a lack of knowledge of the litigation process rather than wilful or deliberate inaction, warranting the setting aside of both the default judgment and the dismissal order.

• Yukon's Legal Profession Act prohibits corporations from being represented in legal proceedings by non-lawyers, and the Court found no applicable exceptions, discretion, or rules permitting the plaintiff's directors to continue representing the corporation.

• Policy rationales including the legal distinction between corporations and natural persons, the risk of unregulated non-lawyer representation, and the absence of cost consequences for impecunious corporations supported the requirement for the plaintiff to obtain legal counsel.

The construction dispute and the parties involved

Block on Block Builders Inc. is a closely held residence construction corporation in Whitehorse, Yukon, with three directors who are also its only shareholders. The company entered into a fixed-price contract with homeowners Abudu and Celestina Sule for the construction of a home in the Whistle Bend neighbourhood of Whitehorse. The Sules paid $297,670 towards the construction, which was originally to be completed by July 30, 2022. The completion deadline was later extended to February 10, 2023. When the home remained unfinished by the extended deadline and the Sules identified alleged deficiencies in the completed work, they terminated the contract on March 14, 2023. The Sules then hired other contractors to complete the construction and correct deficiencies, which was accomplished by September 18, 2023.

The competing claims

Block on Block brought a claim for breach of contract, unjust enrichment, and quantum meruit in the amount of $280,634.96, representing the unpaid costs of construction plus interest. The Sules counterclaimed for a total of $98,526.04, which encompassed their costs beyond the fixed contract price of $70,501.41, expenditures for rent and electricity while awaiting completion of construction, mortgage interest, and an amount for repayment of a loan agreement. The matter had proceeded through discoveries and an unsuccessful judicial settlement conference.

The default judgment and dismissal of the claim

When the action was commenced, Block on Block was represented by a lawyer who filed a notice of intention to withdraw on January 20, 2024, and formally filed a notice of withdrawal on April 29, 2024. After the lawyer's withdrawal, the Sules served a counterclaim on Block on Block on May 14, 2024, by email and registered mail. Block on Block failed to file a statement of defence to the counterclaim. The Sules' lawyer sent a demand letter by email on July 15, 2024, warning that if the statement of defence to counterclaim was not filed by July 29, 2024, Block on Block would be noted in default. No response was received. On October 22, 2024, the Sules noted Block on Block in default. Subsequently, on November 19, 2024, the Sules sought and obtained an order dismissing Block on Block's action at an appearance day on Chambers Day in Court, where Block on Block did not appear. Block on Block explained that during this period, they were experiencing extreme financial strain, facing continual creditor calls, trying unsuccessfully to find new counsel, and their email address was cancelled due to lack of payment some time in the summer of 2024.

The 2025 decision: setting aside the default judgment and dismissal order

In the March 10, 2025 decision (2025 YKSC 15), Chief Justice Duncan considered Block on Block's applications to set aside both the default judgment and the order dismissing their claim. The Court applied the three-part test from Evans v Bauman, 2016 YKSC 71, which requires the applicant to show that the failure was not wilful or deliberate, that the application was brought as soon as reasonably possible, and that there is a meritorious defence or defence worthy of investigation. The Court found that Block on Block's failure to file a defence was attributable to negligence, not wilful or deliberate inaction, and that it may also have been attributable to a lack of knowledge of the litigation process given the absence of litigation counsel. There was no dispute that the application was brought as soon as possible, as the directors came to the Court Registry on December 6, 2024, learned or understood for the first time the existence of the default judgment and its impact, and filed their applications on December 19, 2024. Block on Block also raised a defence worthy of investigation, disputing the Sules' assessment of the value of the work done at the time the contract was terminated, the costs necessary to complete the house construction, and asserting that they offered to correct the deficiencies and the contract was cancelled unfairly and precipitously. The Court also found that a miscarriage of justice would result if Block on Block were not permitted to pursue their claim. Chief Justice Duncan allowed both applications: the default judgment was set aside and the dismissal order was set aside, thereby restoring Block on Block's ability to pursue its claim and defend against the counterclaim. The parties were directed to request a Case Management Conference to discuss next steps.

The 2026 decision: corporate representation by non-lawyers

Following the 2025 decision, a Case Management Conference was convened on February 9, 2026, at the Chief Justice's request to discuss the impact of R v P.S. Sidhu Trucking Ltd., 2025 YKTC 36, which held that the Legal Profession Act, SY 2017, c. 12 prohibits corporations from being represented in legal proceedings by, or receiving legal services from, a non-lawyer. Since April 2024, Block on Block's three directors had been representing the corporation themselves without legal counsel. The central issue in the February 23, 2026 endorsement (2026 YKSC 11) was whether these directors could continue to do so.

Statutory framework and policy considerations

The Court examined sections 30, 31, and 45 of the Legal Profession Act, which define legal services broadly to include representing another person in a proceeding before an adjudicative body, the preparation and filing of documents and the conduct of discovery in relation to the proceeding, and any other conduct necessary for the proceeding. Section 45 prohibits anyone from providing legal services except in accordance with the Act, the regulations, and the rules, and a contravention constitutes an offence punishable on summary conviction by a fine of a maximum of $10,000 for a first offence, and $25,000 for a second or subsequent offence, or imprisonment up to six months, or both. The exceptions in section 31 do not apply to corporate directors representing their company, and no rules have been made by the Executive of the Law Society of Yukon to exclude certain activities from the definition of the provision of legal services. The Yukon Rules of Court similarly contain no provision that addresses this issue, unlike most other jurisdictions. The Court identified several policy reasons supporting the restriction: a corporation is a legal person separate and apart from its directors, officers, and shareholders and cannot appear "in person" as a natural person can; those who choose the advantages of a corporation, including limited liability and tax savings, and rely on the legal distinction between themselves as individuals and the corporate entity when it is to their advantage, should not be allowed to deny this distinction in circumstances where it is not to their benefit; non-lawyers are not required to meet minimum competency requirements, engage in professional development, comply with codes of conduct or trust accounting rules, obtain professional liability insurance, or be subject to complaints or disciplinary action; and the absence of cost consequences to the corporation and its non-lawyer representatives could encourage meritless litigation by impecunious corporations.

The directors' arguments and the access to justice concern

The directors argued that unlike P.S. Sidhu Trucking Ltd., they are a small, closely held corporation that had become insolvent due to financial hardship, and requiring them to obtain legal counsel amounted to an unfair denial of access to justice because they had no choice but to proceed without counsel. They contended that fairness dictates that the court should always have discretion to allow a corporation to be represented by its directors or officers, and they pointed to past instances where this Court had allowed non-lawyers to represent corporations. They also requested assistance through a court-appointed lawyer or legal aid. The Court acknowledged the legitimacy of the access to justice concern but determined that the plaintiff does not qualify for a court-appointed lawyer or legal aid, as those remedies are limited to criminal law proceedings and certain family law proceedings involving children, child protection, or family violence, as long as the applicant falls within the financial guidelines based on income and assets. The Court noted that past practice cannot be relied upon as a rationale to continue the practice where clear legal obligations have been overlooked, and that the legislature and the Law Society of Yukon have chosen to prefer the maintenance of legal competency and procedural efficiencies in court proceedings over the ability of a non-legally represented corporation to access the court process.

Ruling and outcome

In the 2025 decision, the Court ruled in favour of Block on Block by setting aside the default judgment and setting aside the order that had dismissed the company's claim, thereby restoring Block on Block's ability to pursue its claim and defend against the Sules' counterclaim. However, in the 2026 endorsement, Chief Justice Duncan ruled that the Legal Profession Act is clear that a corporation must be represented by legal counsel in its pursuit of a legal action such as this, and the Act contains no provision to permit the Court's exercise of discretion to direct otherwise. Block on Block was therefore required to obtain legal counsel in order to continue the proceeding in court. The Chief Justice indicated the endorsement would be sent to the Law Society of Yukon for their information and consideration. No specific monetary award was made in either decision, as the underlying merits of the construction dispute — involving the plaintiff's claim of $280,634.96 and the defendants' counterclaim of $98,526.04 — have yet to be adjudicated.