Executive Summary: Key Legal and Evidentiary Issues

• Dispute arose from a construction lien for plumbing work partially completed before a fire destroyed the property.

• Service of the statement of claim was legally valid but failed to reach the defendant due to an outdated corporate address.

• Defendant acted promptly upon discovering the default judgment and sought to set it aside.

• The court considered whether the defendant had a plausible explanation and an arguable defence.

• Plaintiff’s assertion that the defence was weak due to loss of evidence was rejected at the motion stage.

• Costs were split, but plaintiff recovered expenses from the default judgment motion due to the defendant’s administrative lapse.

Facts and procedural background

The dispute involves a plumbing contract between ZMAC Plumbing Inc. and Thompson Global Group Ltd. (TGG) related to renovation work at a property in Windsor, Ontario. In May 2024, the parties agreed—largely through email and in-person discussions—to plumbing work for TGG’s property. Before the work was completed, a fire destroyed the building on May 22, 2024. TGG’s principal, Graeme Thompson, recorded a video of the site on the date of the fire, which he later referenced in support of the company’s position that the contracted work was incomplete at that time.

ZMAC sent an invoice in June 2024 for partial work but received no further communication from TGG. Subsequently, ZMAC registered a construction lien on July 17, 2024, and issued a statement of claim two days later.

Attempts to personally serve the claim at TGG’s registered Walker Road address in late July and August failed, as the business had moved. ZMAC eventually mailed the claim to the outdated registered address under Rule 16.03(6) of the Rules of Civil Procedure. TGG had not updated its corporate records with Corporations Canada to reflect the move to Assumption Road, a location known to ZMAC’s process server but not used for service. The statement of claim was never emailed to TGG’s principal.

On November 26, 2024, TGG was noted in default, and ZMAC obtained default judgment. TGG only became aware of the lien and judgment in February 2025 while arranging a refinancing. It promptly moved to set aside the default judgment.

Motion to set aside default judgment

The court considered the motion under Rule 19.08 of the Rules of Civil Procedure and applied the five-part test from Mountain View Farms Ltd. v. McQueen, focusing on timeliness, explanation for the default, the merits of a proposed defence, prejudice to the parties, and the administration of justice.

The motion judge found that TGG acted promptly upon learning of the default. Although ZMAC had complied with the technical service requirements, TGG’s failure to receive the claim stemmed from its own omission in updating its registered office. Nonetheless, the court accepted this as a plausible explanation.

The court also determined that TGG had an arguable defence, including claims that the work was incomplete and that substandard materials had been used. Although ZMAC argued that the fire made it impossible for TGG to prove its case, the court declined to assess the evidence’s strength at this stage, noting that TGG was entitled to discovery and that its proposed defence had an "air of reality."

On prejudice, the court found that TGG would suffer more harm if not allowed to defend the claim, while ZMAC failed to demonstrate any prejudice that could not be remedied by costs.

Outcome and costs

The court granted the motion, setting aside the noting in default and the default judgment. TGG was given twenty days to file a statement of defence.

Each party was ordered to bear its own costs of the motion. However, ZMAC was awarded $3,500 for its costs thrown away from the prior default judgment motion. The court found this fair given that TGG’s failure to update its registered address had caused unnecessary litigation steps.