Executive Summary: Key Legal and Evidentiary Issues

• The defendants brought a motion under Rule 19.08 to set aside a default judgment and stay enforcement.

• The court found the plaintiff failed to properly serve the statement of claim on either defendant.

• Conflicting affidavit evidence and lack of diligence in service led to a finding of defective service.

• Default judgment was set aside as of right due to procedural irregularities.

• The defendants were also found to have an arguable defence and acted promptly upon learning of the judgment.

• All enforcement actions, including garnishment, were revoked and the defendants were permitted to file a defence.

Background and parties involved

Ampere Metal Finishing Inc., the plaintiff, initiated a lawsuit against KenzoKai Metal Finishing Inc. and its principal, Cristian Bran, claiming over $374,000 for unpaid services under a service agreement. Ampere and Mr. Bran were previously business partners in Ampere until Mr. Bran sold his shares in 2021. In September 2024, Ampere filed a statement of claim and later obtained default judgment for over $418,000 when the defendants failed to respond. The judgment also led to enforcement actions including garnishment.

Service and procedural defects

The defendants moved to set aside the default judgment under Rule 19.08, asserting they were not properly served. The court closely examined the plaintiff's affidavits of service and found significant deficiencies. The statement of claim was purportedly served on an individual who was neither confirmed to be associated with KenzoKai nor residing with Mr. Bran. The process server failed to confirm household relationships or employment status, and both affidavits were untested by cross-examination. As such, the court ruled that Ampere failed to satisfy its burden to prove proper service on either defendant.

Legal principles and application

Under Ontario’s Rules of Civil Procedure, valid service is a prerequisite for entering default judgment. Where service is found to be improper, the judgment must be set aside as of right. The court cited leading appellate authority, including Mountain View Farms Ltd. v. McQueen, outlining five key factors for setting aside default judgments. Even if service had been proper, the court found those factors—such as timeliness of the motion, a plausible excuse, and a meritorious defence—favored the defendants.

Assessment of merits and prejudice

The defendants acted promptly upon discovering the garnishment notice in March 2025. They retained counsel immediately and informed both the plaintiff and the court. They offered a credible explanation, citing lack of notice due to improper service. The court also accepted that the defendants raised at least two arguable defences: that parts of the claim may be statute-barred and that some invoices were inflated. It found that setting aside the judgment would not unduly prejudice the plaintiff but would prevent significant prejudice to the defendants.

Conclusion and outcome

Justice M.T. Doi granted the motion in full. The court set aside the default judgment, the noting in default, and all related enforcement actions, including garnishments. The defendants were given 30 days to file a statement of defence. The ruling reinforces the principle that disputes should be resolved on their merits and that procedural fairness, including proper service, is fundamental to justice.