When a defendant is served with a Statement of Claim, they cannot simply put it aside and hope for the best. Failing to respond can result in the defendant being noted in default, which means the lawsuit may proceed without their participation and could ultimately lead to an expensive judgment and public decision against them.
Dunlop v. Interspec Systems Ltd.1 is a worst case scenario for a defendant who chooses to ignore a claim against them. Dunlop also demonstrates the merits of presenting at least a partial defence to a matter.
The Facts
In 2023, Interspec Systems Inc. abruptly closed a facility and reopened its operations over 100 kilometres away. A group of at least eight employees, with tenures ranging from 2 – 32 years and an average age of 54 suddenly found themselves unemployed. None received their final pay, their statutory entitlements under the Employment Standards Act, 2000 (ESA)2, or notice at common law.
After relocating, the defendant, owner Gregor Vahramian, reopened Interspec’s operations under John Doe Corporation in the new location. The group of eight employees sued Mr. Vahramian, Interspec, John Doe Corporation, and several related corporate entities.
This step was unusual: typically, a group of litigants cannot bring claims together in their individual names. Instead, they must bring a class proceeding through the Class Proceedings Act3. That did not happen here, and the eight dismissed employees proceeded as a group.
All defendants were noted in default after failing to submit a Statement of Defence. This meant that all allegations set out in the Statement of Claim were admitted as fact, and the Court would rely on the plaintiffs’ uncontested evidence to assess damages. Mr. Vahramian indicated that he intended to bring a motion to have the default set aside but failed to do so. In the absence of this motion the matter proceeded against the defendants undefended.
The Result
The hearing proceeded in the defendants’ absence, with the Court awarding:
Wages and Notice
Statutory termination pay and outstanding wages, plus common law notice calculated at four weeks per year of service. The Court did not perform its standard analysis of each employee’s notice entitlement, and instead awarded based on each employee’s claim for four weeks pay per year of service.
Human Rights Damages
$25,000.00 to each plaintiff, finding that the dismissals were due to their age.
Aggravated Damages
An additional $25,000.00 for each plaintiff due to the defendants’ egregious conduct, including the refusal to pay accrued wages and benefits.
Costs
$14,161.04 to the plaintiffs on a partial indemnity basis.
Takeaway
Dunlop serves as a stark warning to defendants of the perils of ignoring litigation. Had the defendants mounted even a basic defense, they could have challenged the procedural validity of the combined proceeding, contested each plaintiff’s entitlement to notice, scrutinized their mitigation efforts, and argued against the scale of the damages.
Ultimately, the defendants’ decision to remain silent surrendered their right to mitigate their exposure, leading to this severe and expensive judgment.
This case also demonstrates the importance for plaintiffs of preparing for a hearing. The Court will not simply accept everything outlined in the Statement of Claim as fact and award damages. A plaintiff must present evidence outlining their losses and their basis for a claim of damages. The Court will only award you what you can show you are entitled to receive.
At Rudner Law, we have experience representing both employees and employers in litigation. Even better, we can usually help you avoid it!
You can visit our website to learn more about employee-side litigation and employer side litigation.
If you have any questions about your situation or if you would like to get legal advice, please feel free to contact us.
Endnotes
- Dunlop v. Interspec Systems Ltd., 2026 ONSC 2112 (CanLII), <https://canlii.ca/t/kkbnz>, retrieved on 2026-05-18
- Employment Standards Code, RSA 2000, c E-9, <https://canlii.ca/t/56mck> retrieved on 2026-05-18
- Class Proceedings Act, 1992, SO 1992, c 6, <https://canlii.ca/t/553sl> retrieved on 2026-05-18
