Harvey Joseph Kirsh

A contractor commenced a $205 million action against a public transit authority arising from a major subway expansion contract.

The authority moved under Rule 21.01(1)(a) for determination of a contractual clause prohibiting litigation until the contractor’s final invoice had been processed, and sought a stay under s. 106 of the Courts of Justice Act.

The court held that interpretation of the clause was a pure question of contractual interpretation suitable for determination on a Rule 21 motion.

The provision was enforceable between sophisticated commercial parties and clearly prohibited commencing an action before the contractual triggering event.

As the triggering event had not yet occurred, the action was stayed pending its occurrence.

Following reasons on several construction lien motions relating to a subway station project, the successful lien claimant sought partial indemnity costs exceeding $82,000.

The responding parties challenged the amount as excessive and attempted to dissect the bill of costs without producing their own costs outlines as required under Rule 57.01(6) of the Rules of Civil Procedure.

The court emphasized that costs fixing is not an item-by-item assessment and that reasonable expectation and indemnity principles govern the exercise.

The absence of a costs outline from the objecting party undermined its argument for reductions.

The court fixed costs largely as claimed, awarding partial indemnity costs plus additional costs for preparing submissions.

A subcontractor filed a construction lien arising from specialized grouting and monitoring work performed in connection with the Toronto-York subway extension beneath a university building.

The general contractor moved to discharge the lien, arguing the work occurred on a railway right-of-way and that the university was not an “owner” under the Construction Lien Act.

The court rejected these arguments, holding the university qualified as an owner because the work was requested, controlled, and directly benefitted its property.

The lien was therefore validly preserved by registration on title.

The court also held that the subcontract’s broad arbitration clause required the underlying payment dispute to proceed to arbitration and stayed the lien action while refusing to add the transit authority as a third party.

Following dismissal of the defendants’ Rule 21 motion to strike the claim, the court addressed the issue of costs.

The plaintiffs sought costs, arguing the motion was unreasonable and unsupported by authority, while the defendants contended the motion raised a novel legal issue and that no costs should be ordered.

Applying s.131 of the Courts of Justice Act and Rule 57.01 of the Rules of Civil Procedure, the court considered proportionality, complexity, and the results achieved.

The court rejected the argument that the motion was patently unreasonable but held that the successful parties were entitled to costs.

Partial indemnity costs of $16,500 were awarded to the plaintiffs.

The defendants brought a Rule 21 motion seeking a determination before trial that the plaintiffs’ claim against a surety under a performance bond could not exceed the bond amount and requesting that the action be stayed or limited accordingly.

The dispute arose from a subcontract for compensation grouting work on the Toronto‑York Spadina Subway Extension project.

The plaintiffs alleged that the subcontractor’s breaches caused extensive delay damages and that the surety’s conduct, including alleged inaction and misrepresentation following default, exposed it to liability beyond the bond amount.

The court held that it was not plain and obvious that the plaintiffs’ claim had no reasonable prospect of success, particularly where the pleadings alleged conduct by the surety potentially giving rise to liability beyond the bond cap.

As the legal question was unsettled in Canadian jurisprudence and factual issues remained disputed, the motion was dismissed.

The Court of Appeal issued an addendum to its reasons for judgment released on September 7, 2005.

Following correspondence from CGU Insurance Company of Canada, the court amended paragraph 5 of the reasons to clarify that CGU's concession at the hearing was directed specifically to the trial judge's obiter concerning the absence of an explicit forfeiture provision in the instructions to tenderers, and did not relate generally to the trial judge's interpretation of the bid bond.

The Toronto Transit Commission (TTC) appealed a trial decision dismissing its action for breach of contract against Gottardo Construction Ltd. and its bid bond insurer.

Gottardo submitted the lowest bid for a construction project but subsequently claimed a $557,000 error and refused to execute the contract.

The trial judge found that Contract A was not formed upon the opening of the tenders because additional documents were required, and alternatively, that equitable rescission applied.

The Court of Appeal allowed the appeal, holding that Contract A was formed when the tenders were opened, as the parties clearly intended to initiate contractual relations at that time.

The error was not apparent on the face of the tender, and the financial hardship to the bidder did not render enforcement unconscionable.

Judgment was entered for the TTC for $434,000.