Executive Summary: Key Legal and Evidentiary Issues

• Liability is grounded in breach of contract for unpaid invoices on bespoke equipment supplied by the plaintiff to the defendant.
• The defendant’s failure to defend led to it being noted in default, triggering deemed admissions of the pleaded facts under the Rules of Civil Procedure.
• Affidavit evidence from the plaintiff supported the quantum of the unpaid invoices and confirmed the manufacturing, shipment, and non-payment of the equipment.
• The court applied the test for default judgment, finding that the deemed admissions and supporting affidavit established both liability and damages.
• Mitigation was addressed through evidence that the plaintiff attempted, but was unable, to resell custom-made equipment manufactured to the defendant’s specifications.
• Interest and costs were determined under Ontario law and on a partial indemnity basis, reflecting the time value of money and reasonable legal expenses arising from the default.

Factual background

Moduflex Ltd. is a United Kingdom-based manufacturer of office furniture, storage solutions, library shelving and fitness equipment. It operates as a commercial supplier of bespoke products made to client specifications. Isologe X Corp., operating as “Isophit,” is described as the parent company of the Isophit brand, which focuses on isometric strength training equipment and services. In 2021, Isologe X Corp. retained Moduflex to manufacture equipment for its business. This arrangement involved Moduflex producing fitness-related equipment in accordance with the detailed requests and technical specifications provided by the defendant. Once manufactured, the equipment was shipped either directly to Isologe X Corp. or to its end clients, following the defendant’s instructions. The parties’ business relationship evolved over time. Initially, their agreement required the defendant to be invoiced for each order and to pay those invoices before dispatch of the goods. For a period, this pre-payment structure operated without dispute, and the defendant paid its invoices as they fell due. As the commercial relationship grew, Moduflex began extending practical credit to the defendant. It dispatched some of the defendant’s orders without receiving advance payment, relying on the history of timely payments and the apparent strength of the ongoing business relationship. Ultimately, a total of ten orders were shipped without pre-payment, either directly to the defendant or to its clients, and several other orders had already entered production when problems arose.

Developing payment dispute

The dispute crystallized when the defendant failed or neglected to pay for a group of orders that had already been manufactured and, in many instances, shipped. Moduflex issued invoices for these orders, but the amounts remained outstanding. The equipment involved was custom-built to the defendant’s isometric fitness specifications, limiting its usefulness in other markets. In addition to the ten unpaid orders, the defendant attempted to cancel three other orders after Moduflex had already manufactured the goods. The court accepted Moduflex’s position that those orders “could not be cancelled” once the manufacturing had been completed, because the plaintiff had already incurred the cost of production and the equipment was tailored specifically for the defendant’s needs. When all unpaid and attempted-cancellation invoices were aggregated, the outstanding principal totalled £65,218.67. The court noted that it had reviewed the invoices to confirm the total amount claimed. In July 2024, the defendant acknowledged that this amount was owed, thereby confirming the debt in correspondence or communication with the plaintiff. Despite this acknowledgement and subsequent demands for payment, no funds were remitted to Moduflex. The plaintiff attempted to mitigate its losses by trying to sell the equipment to other potential purchasers, but those efforts were unsuccessful because the equipment had been manufactured to the defendant’s particular specifications, reducing its marketability and commercial appeal.

Procedural history and default judgment framework

The proceeding was commenced in the Ontario Superior Court of Justice, with Moduflex as plaintiff and Isologe X Corp. O/A Isophit as defendant. The cause of action was framed as breach of contract, focused on unpaid invoices and the defendant’s refusal or failure to pay for goods ordered and, in many cases, shipped and used in its business. The defendant did not deliver a statement of defence and did not participate in the litigation process. As a result, it was noted in default under rule 19.02 of the Rules of Civil Procedure. Under that rule, a defendant who fails to defend is deemed to admit the truth of all factual allegations contained in the statement of claim. However, the court noted that deemed admissions are not, by themselves, automatically sufficient to justify judgment. Rule 19.06 provides that a plaintiff is not entitled to judgment merely because the pleadings are deemed admitted; the pleaded facts must still, as a matter of law, entitle the plaintiff to judgment. Where the claim involves unliquidated damages, rule 19.05 requires that a motion for default judgment be supported by proper affidavit evidence. The judge adopted the test articulated in Elekta Ltd. v. Rodkin for motions for default judgment. Under that test, the court must determine (a) what deemed admissions of fact flow from the statement of claim; (b) whether those deemed admissions alone entitle the plaintiff, as a matter of law, to judgment; and (c) if not, whether the plaintiff’s additional admissible evidence, together with the deemed admissions, justifies judgment on the pleaded claim.

Evidence supporting liability and damages

Applying that test, the court considered both the deemed admissions arising from the defendant’s default and the affidavit evidence sworn by David Marcovitch on January 5, 2026. This evidence established several key points. First, Moduflex had in fact manufactured the equipment in accordance with the defendant’s requests and specifications, demonstrating performance of its contractual obligations. Second, the goods were shipped either to the defendant or to its customers as instructed, confirming that Moduflex had fully delivered on its side of the bargain. Third, the parties’ agreement provided that the defendant would be invoiced for each order and required to pay before dispatch, and for a substantial period the defendant complied with that arrangement without dispute. Fourth, the affidavit confirmed that, as the relationship expanded, Moduflex shipped ten orders without pre-payment and that the defendant subsequently tried to cancel three additional orders after those items had already been manufactured. Fifth, the evidence showed that the defendant failed to pay the invoices for these orders, that the total of the outstanding invoices was £65,218.67, and that the defendant had acknowledged this amount as owing in July 2024. Finally, the court accepted that Moduflex tried to mitigate its damages by attempting to sell the custom equipment to other buyers but was unable to do so because the equipment was made specifically to the defendant’s specifications, which undermined its desirability in the broader market. Taken together, these deemed admissions and affidavit evidence satisfied the court that the elements of breach of contract were made out: a valid contractual relationship, performance by the plaintiff, non-payment and repudiation by the defendant, resulting financial loss to the plaintiff.

Assessment of damages, costs and interest

In assessing damages, the court applied the standard contract law principle that the innocent party is entitled to be placed, as far as money can do so, in the position it would have occupied had the contract been properly performed. In this case, that meant Moduflex was entitled to recover the full value of the unpaid invoices—its “loss of bargain”—because it had fully manufactured and, in many cases, shipped the equipment pursuant to the defendant’s orders. The court therefore awarded damages in the principal amount of £65,218.67. The plaintiff also sought costs on a partial indemnity basis. The court reviewed the time spent and rates claimed and found them fair and reasonable in the circumstances. It noted that such costs would have been within the reasonable contemplation of the defendant when it defaulted on its payment obligations, and ultimately awarded Moduflex $2,527.00 in costs, inclusive of disbursements. With respect to interest, the plaintiff initially asked for pre-judgment interest at a contractual rate of 4% plus the Bank of England prime rate, reflecting the parties’ commercial dealings. In the alternative, it sought interest under the Ontario Courts of Justice Act. The judge opted to apply the statutory Ontario rate, reasoning that the purpose of interest is to recognize that the defendant has had the use of money it owed for several years and that the defendant operates in Ontario. Pre-judgment interest was therefore fixed at 5.3% per annum, calculated from October 5, 2023, the date of the last invoice, with post-judgment interest set at 4% per annum on the judgment amount.

Overall outcome and successful party

Bringing these findings together, the court granted default judgment in favour of Moduflex Ltd. against Isologe X Corp. O/A Isophit. The court concluded that the evidentiary record—comprising the deemed admissions and the supporting affidavit—was sufficient to establish liability for breach of contract and to justify the monetary relief claimed. As a result, Moduflex emerged as the successful party and obtained judgment for damages of £65,218.67, together with pre-judgment interest at 5.3% per annum from October 5, 2023, post-judgment interest at 4% per annum, and costs fixed at $2,527.00. The decision does not quantify the precise total interest payable, which will depend on the time elapsed, but the combined orders secure for Moduflex both the unpaid principal and reasonable compensation by way of interest and costs in this commercial debt dispute.