Ontario Superior Court of Justice

Court File No.: CV-19-632176
Date: 2025-03-12

Elembe (LMB) Mechanical Ltd. v. Two Hundred Inc.

Heard: June 21, 25, 27-28, 2024
Released: March 12, 2025
Judge: Todd Robinson

Overview
Issues
Analysis
Conclusion
Costs, Interest & Report

Overview

This lien action arises from the construction of a condominium building located at 200 Woodbine Avenue, Toronto. Two Hundred Inc. (“200”) was the property owner and developer for the project. Elembe (LMB) Mechanical Ltd. (“LMB”) was a trade contractor contracted by 200 to perform plumbing, gas, and HVAC work, which included installing fixtures in the condominium units.

200 retained LCL Builds Limited (“LCL”) (now GCL Builds Limited) to act as construction manager for the project. 200 separately entered into direct contracts with each of the trade contractors performing the construction. It is undisputed that LCL was responsible for managing all trade contractors and the overall construction, including LMB’s work.

LMB asserts that there were significant design revisions during the project that resulted in various changes and extras to its scope of work. LMB’s position is that it was directed to complete the changes by LCL and did so. 200 asserts that it did not authorize or even know about the changes and extra work claimed by LMB. Disputes over payment and claimed extras ultimately resulted in a breakdown in the relationship between LMB and 200. LMB suspended its work for non-payment.

LMB ultimately preserved and perfected a lien for $260,134.31 under the Construction Act, RSO 1990, c C.30. It is undisputed that, by operation of s. 87.3 of the Construction Act, the act as it read on June 29, 2018 – i.e., the Construction Lien Act (the “CLA”) – applies to disposition of LMB’s lien and this lien action. In November 2023, LMB’s lien amount and the correlating contract claim were formally reduced to $244,611.49 by amendment to the statement of claim. Early in the litigation, 200 posted a lien bond for $310,134.31 into court to vacate LMB’s lien. The bond amount was calculated based on LMB’s original lien amount. It remains in court.

It is undisputed that LMB has been paid $1,864,887.86, which is admitted in LMB’s amended statement of claim. 200’s position is that LMB has been overpaid based on the actual value of services and materials supplied. 200 asserts a significant set-off and counterclaim for overpayments, incomplete work, and deficiencies. Although 200 has also asserted claims for punitive damages and damages under s. 35 of the CLA for an improper lien, they were not pursued at trial, other than costs in the event LMB’s lien is not proven.

I find that LMB has partially proved its claim for extras and established an earned and unpaid contract balance of $172,740.47. However, LMB has failed to prove that any amounts were due and payable by 200 as of February 2019, when LMB suspended its work. I further find that LMB had no basis to suspend its work and, by doing so, breached the parties’ contract. I also find that LMB ultimately abandoned the contract more than 45 days prior to purporting to preserve a lien, such that its lien rights had expired when the claim for lien was registered.

I further find that 200 has failed to prove the incomplete and deficient work that it alleges, as well as allegedly incurred completion and rectification costs. I find that LMB’s contract work was substantially complete, with only fixture installation and finishing work in the two penthouse units remaining. Since LMB did not complete that work, 200 is entitled to a credit for it, as conceded by LMB, but in an amount greater than what LMB has provided, which has been accounted for in my calculation of the earned contract amount.

In the result, LMB shall have judgment against 200 in contract for $172,740.47. 200’s counterclaim is dismissed. LMB’s lien is declared expired and the lien bond posted as security for the lien shall be delivered up to 200.

Issues

In addition to LMB’s lien, there were two other liens when this lien reference was constituted. That included a lien by LCL. However, the other two liens and lien actions were resolved prior to trial. The only remaining disputes in this reference are LMB’s claim for unpaid services and materials and 200’s set-off and counterclaim for breach of contract and negligence.

There are several disputed issues between the parties to be decided at this trial, namely:

(a) Did LMB complete its base contract work?
(b) Has LMB proved its claimed changes and extras? Specifically:
- (i) Did 200 waive strict compliance with the change provisions of the contract?
- (ii) Has LMB proven that its claimed extras were proper extras to the contract?
- (iii) Was LCL authorized to approve changes in LMB’s work on 200’s behalf?
- (iv) Were changes and extras authorized and approved by 200?
- (v) How much is owing to LMB for approved extras?
(c) Has 200 proved any of the deficiencies it alleges in LMB’s work?
(d) Who breached the contract?
(e) Did LMB abandon the job and is its lien timely?

Analysis

Preliminary: Quality of Evidence

Before addressing the evidence on the disputed issues, I wish to comment on the way affidavit evidence was prepared by both sides for this summary trial. It has had a direct impact on the weight I have given certain witness evidence. I acknowledge that, at least as I understand it, the lawyers appearing at trial for both parties were not the lawyers who had primary carriage of the files when trial affidavits were prepared.

In my view, both parties failed to organize their evidence in a manner that assisted me in easily understanding the extent of completed contract work, disputes with claimed changes and extras, and alleged deficiencies. On key disputed issues, notably extras claimed by LMB and incomplete work and deficiencies alleged by 200, witnesses on both sides have adopted as their evidence documents appended to their affidavits, but without providing any direct evidence on the substantive contents of those documents. Doing so has deprived me of the assistance of specific witness observations and recollections on surrounding factual circumstances, which are frankly necessary to properly weigh the evidentiary value of the documents.

Also, with respect to evidence on changes and extras, none of the witnesses dealt with what work was actually performed, how that work was within or beyond the original scope, and how changes did (or did not) relate to design and other changes requested or directed during the project. Almost all the evidence on changes and extras from both sides was general and non-specific.

Both parties have also served and rely on notices given under s. 35 of the Evidence Act, RSO 1990, c E.23. That section permits certain business records to be admissible as an exception to the rule against hearsay. The parties’ respective Evidence Act notices list a variety of documents appended directly to witness affidavits as exhibits or referenced in those exhibits and included in the parties’ joint document book.

The Evidence Act notices do little to assist the parties in meeting their evidentiary onuses. By operation of s. 35(2), records of an “act, transaction, occurrence or event” are admissible for the truth of their contents, provided those records were made in the “usual and ordinary course of any business”. It is expressly stated in the subsection that it must have been part of the “usual and ordinary course of such business to make such record at the time of such act, transaction, occurrence or event or within a reasonable time thereafter.”

A party seeking to rely on s. 35(2) must tender evidence supporting that the documents were made in the usual and ordinary course of the business preparing them. I have no such evidence from either party for many of listed documents. Some documents were not even prepared by any of the witnesses called at trial. In many cases, I am effectively being asked to infer that the documents must have been prepared in the “usual and ordinary course of business” simply by virtue of the nature of the document, without any submissions made on why that is the case.

Ultimately, s. 35(4) provides that the circumstances under which a record is made, including lack of personal knowledge by the maker, may affect its weight, but does not affect its admissibility. I have accordingly had to consider what weight to give to documents that have been casually attached to trial affidavits with no explanation as to the circumstances of their creation or the work identified in them, and to documents on which there was little, if any, direct evidence from any witness, yet are referenced in exhibits to trial affidavits.

Parties have an obligation at trial to tender factual evidence that support their positions on liability and damages and, importantly, that underpin their arguments for why the court should accept their positions. In this case, the parties have essentially handed me hundreds of pages of documents with limited direct evidence from the witnesses about them. They appear to have expected me to spend time reviewing and correlating various charts to referenced documents in a manner that was not done by any witness through the trial affidavits or in oral testimony. In my view, doing so was effectively abdicating their respective evidentiary obligations.

While this trial decision has remained under reserve, I have spent considerable time trying to connect the dots between the various summaries of LMB’s changes and extras and the Scott Schedule that the parties themselves failed to connect during witness testimony and closing submissions. I have often been unable to correlate brief witness evidence on summary charts that refer to dozens of other documents on which the witness gave no direct evidence. That is a failing of the parties. It has accordingly been a factor in my decision on whether each side has met its evidently onuses at this trial.