Executive Summary: Key Legal and Evidentiary Issues

• Revocation of the default judgment turned on whether the defendant was taken by surprise. Its representative testified that the proceeding had been affixed to the main door of a building with more than 300 units, not to her unit.
   
• Balancing the right to be heard against the stability of judgments, the court found the defendant's representative sincere and free of negligence, and granted the revocation.
   
• Article 2129 of the Civil Code of Québec governed what the service provider had to repay after the client terminated the services contract.
   
• A contractual clause preserving $10,000 in minimum non-refundable fees was deducted from the plaintiff's refund claim.
   
• Partial completion of phase one and some of phase two, admitted on cross-examination, was among the evidence behind the court's 50% reduction of the remaining balance.
   
• Claims of $5,000 for trouble and inconvenience and $5,000 in moral damages failed for lack of convincing evidence and because courts do not award such damages to legal persons.
   

Facts of the case

9353-6274 Québec inc., a company that buys and sells buildings, hired 9456-9720 Québec inc., which does business as Arthena and manages construction work, after becoming dissatisfied with its project manager at the time. The parties signed a services contract in August 2024 for the plaintiff's property at 11875-11895 Bellevoix Avenue in Montréal. Total cost of the work was $74,963.70 including taxes, and the plaintiff made an initial payment of $24,143.70.

Concerns about progress surfaced in early September 2024, when Arthena assured the plaintiff that everything was in order and that its architect was still working on the file. At an October meeting, the plaintiff learned that a new architect, George Guirguis, a contract service provider rather than an Arthena employee, was now on the file. The plaintiff put its concerns about the project's progress in writing. On November 17, 2024, it received an email from the City of Montréal setting out comments and requirements on the plans Arthena had submitted, and again raised its concerns. Arthena replied that this was entirely normal for this type of project. The project required derogations and exemptions from the City, mainly regarding the number of units permitted in the building, and was not a simple construction. Relations kept deteriorating, Guirguis withdrew from the project, and after an exchange of emails the plaintiff terminated the contract, mainly because the relationship of trust had broken down.

The plaintiff sued for $34,143.70: a refund of the $24,143.70 it had paid, $5,000 for trouble and inconvenience caused by poor management, and $5,000 in moral damages for stress. On August 20, 2025, a special clerk issued a default judgment ordering Arthena to pay $24,143.70 plus interest and legal costs. Arthena served and filed an application for revocation of that judgment on September 16, 2025, with a defence denying it owed anything. Both the revocation application and the merits were heard together on May 7 and 8, 2026.

Policy and legislative provisions at issue

Under the contract, the work was divided into three phases, priced before taxes: a preliminary design phase at $21,100, a preliminary phase covering plans for the permit application at $15,600, and a final phase covering plans for tender and construction at $28,500. Timing was left partly open, with the contract stating that the total duration depended on the City but that Arthena was preparing the project for spring 2025. Section 11, in a passage on non-refundable fees, provided that neither Arthena nor the client could be held liable for a permit refusal or other administrative complication. The same passage reserved Arthena's right not to reimburse the minimum hours paid for architect and engineer services, and stated that minimum project fees of $10,000 would be maintained for those services.

The court confirmed that the plaintiff had the right to end the contract, citing article 2125 of the Civil Code of Québec. Article 2129 then requires the client, on termination, to pay in proportion to the agreed price the actual costs and expenses and the value of the work performed, while the service provider must repay any advance received in excess of what it has earned; each party also remains liable for any other injury the other has suffered. On revocation, the court relied on article 346 of the Code of Civil Procedure for the criteria and article 17 in holding that the right to be heard must prevail. Articles 2803 and 2804 of the Civil Code were cited on the burden of proof.

Reasoning and analysis

The court framed the revocation request as a contest between two principles: every litigant's right to be heard, known as the audi alteram partem rule, and the stability of judgments, which should not be disturbed except for serious reasons going to the heart of a party's right to be heard. Berri Nawar, Arthena's representative, testified that she never received the originating application. Her building has more than 300 units, and her unit cannot be reached unless she grants access through the intercom. While the bailiff's report stated that the proceeding had been affixed to the door, she said this was the building's main door rather than her unit's, and that her work often takes her away from home to visit construction sites. She learned of the judgment from the plaintiff's lawyer's letter dated August 21, 2025, and contacted her lawyer when she received it. She would certainly have done the same had she received the originating application. The court also noted that a Small Claims Division file on the same subject existed between the parties. Accepting her evidence as sincere, it found she had been taken by surprise, intended to contest the claim, and showed no negligence or laxity, so the criteria for revocation were met.

On the merits, the plaintiff bore the burden of proof on a balance of probabilities. Although it was entitled to end the contract, the court found no convincing evidence of errors or negligence by Arthena, which had incurred costs for a draftsperson and for Guirguis's services. The court also relied on section 11, noting that the plaintiff's own first demand letter had deducted the $10,000 minimum fee and claimed only $14,143.70, even though a second demand letter sought the full $24,143.70. Under cross-examination, the plaintiff's representative admitted that part of the first phase and some parts of the second phase had been completed, and Arthena filed a series of plans showing the work performed. Quantifying the share of work done and the related fees and costs was difficult, and phase one had not been fully completed. Weighing testimony it described as often contradictory, together with the exhibits, the court deducted the $10,000 contractual minimum and reduced the remaining $14,143.70 by 50% to reflect the work accomplished, arriving at $7,071.85. Neither the claim for trouble and inconvenience nor the claim for moral damages was supported by convincing evidence, and settled case law does not award those damages to legal persons.

Ruling and overall outcome

The court granted Arthena's application for revocation, revoked the August 20, 2025 default judgment, and allowed the plaintiff's claim in part. Partially successful on the merits, 9353-6274 Québec inc. was awarded $7,071.85 of the $34,143.70 it had claimed. Arthena must pay that sum with interest at the legal rate and the additional indemnity under article 1619 of the Civil Code of Québec from April 10, 2025, plus legal costs. The decision does not state the amount of those costs.