Executive Summary: Key Legal and Evidentiary Issues

• Plainview Heights Property Ltd. sought default judgment against only three of the four defendant purchasers following a failed real estate transaction in Clarington, Ontario.
   
• Uncertainty in the record over whether Jo-Ann Abella Santos had been noted in default raised a service problem under r. 37.07(1).
   
• Her apparent bankruptcy left unclear what would become of the claim against her and whether only partial judgment was being sought.
   
• Deemed admissions on a default motion extend only to allegations of fact, not conclusions of law or of mixed law and fact.
   
• Damages and mitigation evidence came solely from general counsel's affidavit, which the court described as replete with hearsay.
   
• Venue was flagged because none of the parties appeared to be connected to Toronto.
   

Facts of the case

Plainview Heights Property Ltd. sued Jo-Ann Abella Santos, Gilbert B. Santos, Kimberly Anne Santos and Tiffany Amber Santos over a failed real estate transaction. According to the plaintiff, the parties entered into an Agreement of Purchase and Sale on August 22, 2023, for a residential home at 215 Flood Avenue, Clarington, Ontario, priced at $1,099,900.00. Its factum states that the purchasers failed to pay the required deposit and failed to close on the closing date.

The plaintiff says it mitigated its damages by selling the property for $865,000 and claims damages of $235,126.90. On the motion, it asked that the defendants' deposits of $60,226.90 be forfeited, which it says would bring its damages to $174,900.00. Its general counsel's affidavit, however, puts the net damages at $174,860.00.

The prayer for relief sought a declaration of breach, damages for breach of contract in an amount to be determined, punitive damages and pre-judgment interest. It also sought a declaration that deposits held by the plaintiff in trust for the defendants be forfeited "in favour of the defendants" [sic]. Under r. 19, the plaintiff then moved in writing for default judgment against Gilbert B. Santos, Kimberly Anne Santos and Tiffany Amber Santos only. All four defendants were self-represented.

Policy and legislative provisions at issue

No terms of the Agreement of Purchase and Sale are reproduced in the endorsement; the provisions discussed come from the Rules of Civil Procedure. Under r. 19.02(1)(a), a defendant noted in default is deemed to admit the truth of all allegations of fact in the statement of claim. Rule 19.05(1) allows a plaintiff to move for judgment against such a defendant, while r. 19.05(2) requires affidavit evidence where the claim is for unliquidated damages. A plaintiff is not entitled to judgment under r. 19.06 unless the deemed facts "entitle the plaintiff to judgment."

Rule 37.07(1) provides that the notice of motion "shall be served on any party or other person who will be affected by the order sought, unless these rules provide otherwise." Hearsay evidence on a motion is permitted by r. 39.01(4). The court also referred to r. 13.1.02(4) on whether the action ought to be transferred, and r. 13.1.02(5) on convening a case conference.

Reasoning and analysis

Service was the court's first concern. Only the three defendants against whom judgment was sought had been served with the motion record, and the record indicated the defendants were served on August 27, 2024. The affidavit of Alex Bottoni, the plaintiff's general counsel, stated that only those three were noted in default, yet the factum said the "purchasers" were. That left it unclear whether Jo-Ann Abella Santos had also been noted in default; if she had not, r. 37.07(1) required that she be served as a person affected by the order.

An earlier endorsement dated June 19, 2026 had directed service of the motion record with no exception carved out. That direction followed Casa Manila Inc. v. Iannuccilli, 2018 ONSC 7083, which requires a motion for default judgment to be served on a defaulting defendant.

Beyond service, the plaintiff did not address the impact of its claim against Ms. Santos, leaving open whether it sought partial default judgment and what would become of that claim. She had apparently declared bankruptcy. While the court presumed the action was stayed against her, it said the effect of the bankruptcy was not clear. At a minimum, it said, the plaintiff should explain the impact on the damages claim against the other purchasers, or whether the motion would result in partial judgment.

On the evidence, the court relied on Paul's Transport Inc v. Immediate Logistics Limited, 2022 ONCA 573. That decision holds that r. 19.02(1)(a) deems only allegations of fact admitted, not conclusions of law or of mixed law and fact. Where the pleaded facts do not support the pleaded conclusion of law, a motion judge may decline to grant judgment despite the defendant's failure to defend.

A plaintiff must also prove its damages claim on a default judgment motion. The court applied the three-part inquiry in Elekta Ltd. v. Rodkin, 2012 ONSC 2062. That inquiry asks what deemed admissions flow from the pleading and whether they entitle the plaintiff to judgment as a matter of law. If they do not, it asks whether admissible evidence combined with the admissions does.

Mr. Bottoni's affidavit was the only evidence filed. Because it was based on his review of documents, the court found it replete with hearsay. Citing R. v. Chan, 2007 CanLII 52429, and CPC International Inc. v. Seaforth Creamery Inc. (1996), 49 C.P.C. (3d) 363, the court noted that information-and-belief statements ought to be restricted to non-contentious matters.

His statements on the amount of damages were described as bald, and his evidence that the plaintiff had mitigated was likewise based on hearsay. Relying on Alfonso Izzo v. Tonnina Ministro, 2020 ONSC 6703, the court observed that although r. 39.01(4) permits hearsay on a motion, hearsay on a central point in issue is not proper.

Venue was the final issue. None of the parties appeared to be connected to Toronto: the plaintiff carries on business in Clarington, the defendants are from Whitby, and the property is in Clarington.

Ruling and overall outcome

The motion for default judgment brought by Plainview Heights Property Ltd. was dismissed, without prejudice to the plaintiff renewing it. Before any renewal, a case conference must be convened under r. 13.1.02(5). Plaintiff's counsel may schedule that conference to address whether the action ought to be transferred under r. 13.1.02(4). The endorsement awards no damages and makes no costs order, leaving no party with a judgment or any monetary amount in its favour.