Executive Summary: Key Legal and Evidentiary Issues

• Corporate defendant Monte’s Premium Meats Inc. (MPM) was found to have been properly served and offered no credible excuse for its failure to defend the action.
• Documentary evidence (time-and-materials invoices and contemporaneous emails acknowledging “funds owing” and an “outstanding balance”) defeated MPM’s alleged fixed-price contract and delay-based defences.
• The court held that MPM had no arguable defence on liability or quantum for the unpaid account of $154,616.34.
• Mr. Monte’s later denial of proper service and of any debt owing was rejected as bald and self-serving when weighed against the neutral process server’s affidavit and earlier correspondence.
• Personal liability of Mr. Monte turned on the existence and enforceability of any personal guarantee, including the application of section 4 of the Statute of Frauds requiring a signed written guarantee.
• To protect the integrity of the administration of justice, the court preserved the default judgment against MPM, allowed Mr. Monte to defend only his personal liability, and ordered costs totalling $12,274 in favour of the plaintiff.

Facts of the case

Consortium Mechanical Inc. is a contractor that agreed, under an oral arrangement, to transfer and install the meat storing and selling facility of Monte’s Premium Meats Inc. (MPM) at its premises on Royal York Road in Etobicoke. The work was substantial and involved both transfer and installation aspects for the facility. There was no written contract documenting a fixed price or detailed schedule. Instead, the business relationship proceeded on the basis of the contractor performing work and issuing invoices as the project progressed. Consortium Mechanical rendered four invoices to MPM between March 2023 and mid-July 2023. These invoices totalled $244,984.04 and were all expressed as time-and-materials billings, with no mention of a fixed contract price. Over the course of the project, MPM paid $90,367.70 to Consortium Mechanical. This left an unpaid balance of $154,616.34. That unpaid balance became the amount of the plaintiff’s claim against MPM in this proceeding. The work did not take place over a short period of time. The invoices alone showed work and charges spread over roughly five months, from March through July 2023, and the subsequent correspondence indicated that work was still ongoing or being finalized as late as October 2023. This time span became important when the defendants later attempted to claim that the parties had agreed to complete the work within a single month. Following the issuance of the final invoice on July 25, 2023 for $147,550.34 (which was not paid at all), the plaintiff’s representative, Kevin Beer, emailed MPM’s principal, Ernesto Monte, on July 26, 2023. In that email, he attached all of the outstanding invoices and requested payment. Mr. Beer also asked for what he called a “binding letter” regarding when the plaintiff would be paid from the bank. Mr. Monte’s reply did not deny that money was owed. Instead, he said he would forward the information to his accountant, asked for patience, and expressed the hope that the finishing work could continue without interruption. In October 2023, after three more months without payment, Mr. Beer followed up by email on October 24, 2023, stating that the account was now over 90 days old and setting out the exact balance of $154,616.34 as owing. Again, Mr. Monte did not deny the debt. In his October 26, 2023 email, he acknowledged Mr. Beer’s concerns “for the funds owing,” apologized, and promised to provide a written proposal for the “outstanding balance.” The plaintiff interpreted this “proposal” as a payment plan, which was consistent with the content of Mr. Beer’s own October 24, 2023 email. At no point in this contemporaneous correspondence did Mr. Monte assert that there was no debt or that a fixed price had already been fully paid.

Procedural history and default judgment

Consortium Mechanical eventually commenced an action against both MPM and Mr. Monte personally in the Ontario Superior Court of Justice. The statement of claim alleged that MPM owed $154,616.34 for the unpaid invoices and alleged that Mr. Monte personally guaranteed payment of MPM’s debt. The plaintiff also pleaded that Mr. Monte was the directing mind of the corporation, though its primary theory of personal liability was an alleged personal guarantee. On June 21, 2024, a professional process server, Ian McIntyre, attended at 409 Royal York Road, MPM’s admitted place of business, and left a copy of the statement of claim with a person who acknowledged that he was Ernesto Monte. Mr. McIntyre subsequently swore an affidavit of service on June 27, 2024, describing the circumstances of service. The defendants did not deliver a statement of defence within the required time. They were noted in default, and on August 22, 2024, the Registrar signed a default judgment in favour of Consortium Mechanical for the amount claimed. The plaintiff then moved promptly to enforce that judgment, incurring costs to note the defendants in default, obtain the default judgment, issue writs of seizure and sale, and initiate garnishment proceedings. Early in 2025, through the garnishment process, MPM and Mr. Monte became aware of the judgment. There was correspondence from Mr. Monte’s accountant dated January 16, 2025, followed by a letter from defence counsel dated February 18, 2025. Notably, neither of these communications complained about improper service of the statement of claim. Instead, those issues were raised only later in the context of the motion to set aside the default.

The motion to set aside default judgment

MPM and Mr. Monte brought a motion seeking wide-ranging relief. They asked the court to set aside the default judgment signed by the Registrar on August 22, 2024, to set aside the noting in default, to grant leave to deliver a statement of defence, to stay enforcement proceedings, and to order the return of all garnished funds. The plaintiff opposed the motion in full. In deciding the defendants’ motion, Associate Justice Wiebe applied the well-known criteria from Mountain View Farms Ltd. v. McQueen. The court considered whether the motion was brought promptly after discovery of the default judgment, whether there was a plausible excuse for the defendants’ default, whether there was an arguable defence on the merits, where the balance of prejudice lay, and how setting aside or maintaining the judgment would impact the administration of justice. Although these factors are sometimes described as a “test,” they are applied flexibly and disjunctively; the presence or absence of one may be outweighed by others in the overall assessment. On the timing issue, the court accepted that the motion was brought promptly once the defendants became aware of the judgment through garnishment in January 2025. That factor favoured the defendants. But on the other key considerations—explanation for default, arguable defence, prejudice, and administration of justice—the defendants, especially MPM, fared poorly.

Service, credibility, and explanation for default

The heart of the defendants’ explanation for their default was Mr. Monte’s assertion in his affidavit that he had “never been properly served” with the statement of claim. The court contrasted this late, generalized assertion with the detailed, contemporaneous affidavit of service from process server Ian McIntyre. Mr. McIntyre, a neutral party with no stake in the outcome, deposed that on June 21, 2024 at 12:15 p.m. he personally served the statement of claim at 409 Royal York Road on a person who acknowledged being Ernesto Monte. That affidavit was sworn well before the motion and had never been challenged by way of cross-examination. In evaluating credibility, the court noted that Mr. Monte did not identify what, if anything, was improper about the service he complained of. His statement did not deny that service in fact occurred; it merely asserted that it was not “proper,” without particulars. Moreover, when the garnishment first revealed the default judgment in January 2025, neither Mr. Monte’s accountant’s letter nor defence counsel’s February 2025 letter raised any concern about improper service. That silence at an earlier, critical stage undermined the later claim of improper service advanced for the purposes of the motion. The court concluded that the defendants had no plausible excuse for their default. Proper service had been effected on MPM at its business premises, on a person acknowledging he was Mr. Monte, and the defendants simply failed to respond.

Merits of the defence for Monte’s Premium Meats Inc.

The court next turned to whether MPM had an arguable defence on the merits. MPM’s primary position was that the parties had agreed to a fixed price contract of $90,000 for the entire job and that MPM had paid that amount in full, so nothing more was owing. The court found there was no air of reality to this defence. All four invoices issued by Consortium Mechanical were time-and-materials invoices and contained no suggestion of a fixed contract price. The supposed fixed price of $90,000 represented only about 36% of the total invoiced amount of $244,984.04. The court reasoned that no reasonable contractor would agree to a fixed price that would necessarily result in such a catastrophic loss without any written confirmation or even a reference in the billing documents. The fact that MPM had paid $90,367.70 did not, in the court’s view, create any inference that the plaintiff had agreed to cap its recovery at that level. There was no evidence to support that interpretation. Even more importantly, the contemporaneous email exchanges between Mr. Beer and Mr. Monte were inconsistent with the alleged fixed-price arrangement. When pressed for payment in July and October 2023, Mr. Monte never claimed that the parties had agreed to a fixed price that had already been satisfied. Instead, he acknowledged there were “funds owing,” apologized for the delay, and referred repeatedly to formulating a “proposal” for the “outstanding balance.” The court treated these as effective admissions that a substantial amount remained owing, which cut directly against the fixed-price defence advanced on the motion. MPM also claimed that the plaintiff had agreed to complete the work within one month and that delays beyond this period caused losses to the defendants. The court examined the record and found this allegation unsupported. The invoices were issued over five months, and correspondence indicated the work remained ongoing into October 2023. No contemporaneous complaint about delay was produced. The only evidence for a promised one-month completion and delay damages was Mr. Monte’s own uncorroborated testimony, which the court regarded as bald and self-serving. As a result, the court concluded that there was no arguable defence for MPM either on the amount owing or on any delay-based counterclaim.

Prejudice and administration of justice for the corporate defendant

When weighing prejudice, the court noted that Consortium Mechanical is a small business that is “not a point-of-sale business” and that it relies heavily on customers paying their invoices in a timely manner. The unpaid account had caused significant disruption to its cash flow and overall business, compelling it to incur the extra effort and expense of obtaining default judgment and vigorously enforcing it. The plaintiff’s evidence explained that this financial pressure was the reason it pursued the default and enforcement steps so promptly and thoroughly. In contrast, the only prejudice identified by MPM and Mr. Monte was the loss of an opportunity to defend the claim. Given the court’s finding that MPM lacked any arguable defence on the merits, that asserted prejudice carried little weight. On the administration of justice, the court emphasized that it would damage public confidence in the courts if a debtor, having ignored properly served proceedings and facing a legitimate, well-documented debt, could then enlist the court’s aid to escape payment through procedural manoeuvres. In the court’s view, MPM’s conduct fit that pattern. Allowing MPM to undo the default judgment in those circumstances would make the court “a party to the efforts of a debtor trying to avoid paying its legitimate debts.” The court therefore held that the integrity of the justice system required that the default judgment against MPM remain in place.

Personal liability of Ernesto Monte and the Statute of Frauds

The court treated the personal liability of Mr. Monte separately from that of the corporation. The plaintiff’s claim against him did not rest primarily on the “directing mind” doctrine; rather, it depended on the allegation that he had personally guaranteed MPM’s debt. The statement of claim alleged that around July 26, 2023, Mr. Monte gave a verbal guarantee of payment and that the plaintiff requested a binding letter to confirm that promise. The evidence, however, was equivocal. Mr. Beer’s July 26, 2023 email to Mr. Monte asked for “a binding letter” as to when payment would be made from the bank and attached the outstanding invoices. It was undisputed that no such binding letter was ever provided. In the later October 24, 2023 email, Mr. Beer again sought payment and noted that the account was more than 90 days in arrears, but he did not refer to any verbal personal guarantee. Mr. Monte, for his part, swore that he never personally guaranteed the account and never signed a personal guarantee. Against this evidence, the court concluded that it was not clearly established that Mr. Monte had given an enforceable personal guarantee to the plaintiff. Crucially, the court raised the application of section 4 of the Statute of Frauds, which neither counsel had fully addressed in their materials or oral submissions. Section 4 provides that no action shall be brought to charge a person on a promise to answer for the debt of another unless the agreement, or some memorandum or note of it, is in writing and signed by the party to be charged or an authorized representative. On the record before the court, there was no written, signed personal guarantee from Mr. Monte. Nor had the parties canvassed whether any exception to the Statute of Frauds might apply. In these circumstances, the court held that Mr. Monte did have an arguable defence regarding his personal liability for MPM’s debt. It also reasoned that the administration of justice would be undermined if a creditor could obtain what would effectively be a windfall personal judgment against a corporate principal without having taken proper care to secure a clearly enforceable written guarantee.

Final outcome and monetary awards

The court’s ruling therefore distinguished sharply between the corporation and its principal. As to Monte’s Premium Meats Inc., the motion to set aside the default judgment was dismissed. The court held that the motion was brought promptly but that there was no plausible excuse for the default, no arguable defence, and that both prejudice and the administration of justice favoured leaving the judgment intact. The default judgment for the unpaid invoices, in the amount of $154,616.34, remains in force against MPM. As to Mr. Monte personally, the court set aside the default judgment only in part. It granted him leave to serve a statement of defence and to contest his personal liability for MPM’s debt. Enforcement proceedings were stayed as they related to him personally, and any garnished funds belonging solely to him were to be returned. The underlying question of whether he is personally liable as guarantor will be decided later on a full record. On costs, the court accepted that this motion was entirely the product of Mr. Monte’s failure to deliver a defence for himself and MPM. Consortium Mechanical had incurred $4,680 in enforcement costs (noting in default, default judgment, writs of seizure and sale, and garnishments) and $7,594 in partial indemnity costs for the motion itself. The court ordered that both MPM and Mr. Monte, jointly and severally, pay $8,477 to Consortium Mechanical (comprised of the $4,680 enforcement costs plus half of the motion costs, $3,797), and that MPM alone pay a further $3,797 (the remaining half of the motion costs). The total costs award in favour of Consortium Mechanical therefore amounts to $12,274, in addition to the substantive judgment of $154,616.34 against MPM. In practical terms, Consortium Mechanical remains the successful party in this decision, with a corporate judgment for $154,616.34 and a present costs award totalling $12,274, for an overall monetary result of $166,890.34 in its favour, subject only to any further adjustment the court might make if either side files short written submissions challenging the costs award.