2016 ONSC 4588
COURT FILE NO.: CV-15-525293
DATE: July 13, 2016
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kong-Crete Construction & Investment Corp.
C. Baker for the plaintiff Tel: 905-773-8910; Fax: 905-895-8269
Plaintiff
- and -
Suganthini Ganthithasan, Rajadurai Velupillai cob as Altona Custom Homes and Altona Group of Companies and Mukunth Rajadurai cob as Altona Custom Homes and Altona Group of Companies
L. Jacques for defendants[^1] Tel: 416-630-2500; Fax: 416-636-0246
Defendants
HEARD: July 12, 2016
Master C. Albert
[1] Kong-Crete Construction & Investment Group Corp. (“Kong-Crete”) supplied concrete and foundation services and materials on a construction project at 47 Canary Crescent, Toronto, pursuant to a verbal contract with the general contractor. In issue is whether Kong-Crete’s contract was with Rajadurai Velupillai and Mukunth Rajadurai operating as Altona Custom Homes or whether it was with their corporation, 6736238 Ontario Inc.
[2] Kong-Crete registered a construction lien for $42,798.75 on March 13, 2015 as Instrument AT3832007 and a certificate of action on April 8, 2015 as Instrument AT3851606 against lands described as PIN 10063-0152 LT:
LT 101 PL 5099 North York; S/T NY258062; Toronto (N York), City of Toronto
[3] Suganthini Ganthithasan, the owner of the improved property at 47 Canary Crescent, has not participated in this litigation and was noted in default on August 11, 2015.
[4] The trial was conducted as a reference under the Construction Lien Act[^2] (the “Act”) with a hearing for directions convened on February 29, 2016 to distill the issues for trial and order the pre-trial exchange of affidavit evidence in chief and trial documents.
[5] Despite the clear pretrial directions issued, several preliminary and procedural issues arose at trial regarding the admissibility of evidence. These issues and my rulings are set out in Appendix “A” to these reasons.
I. Background
[6] Kong-Crete has had a business relationship with Mr. Velupillai and Mr. Rajadurai for several years, supplying concrete services and materials on several projects since 2010.
[7] The parties entered into a verbal contract regarding 47 Canary Crescent. Pursuant to the contract Kong-Crete supplied concrete foundation services and materials from January 22 to January 31, 2015. The services and materials supplied include formed and poured footings, formed and poured base walls, formed interior strip footings, formed lineal concrete walls and garage footings. The defendants do not allege that the work was deficient or incomplete.
[8] Kong-Crete claims that the contract price was $42,798.75 and none of it has been paid. Mr. Rajadurai, in his first affidavit of evidence in chief, asserts that the contract price was initially $26,000.00 and the parties agreed to reduce it to $16,000.00. Mr. Rajadurai further asserts that he paid Kon-Crete $26,000.00 in cash.
II. Issues
[9] The issues are:
a) Did Kong-Crete contract with Rajadurai Velupillai and Mukunth Rajadurai as individuals carrying on business as Altona Custom Homes and Altona Group of Companies, or did Kong-Crete contract with 6736238 Ontario Inc.?
b) What was the contract price?
c) How much of the contract price has been paid and how much is owing?
d) Did Kong-Crete preserve and perfect the lien claim in time?
e) What is the liability of the owner, Suganthini Ganthithasan?
III. Analysis
a. The contracting parties
[10] The defendants Rajadurai Velupillai and Mukunth Rajadurai, in paragraph 2 of their statement of defence, admit paragraph 4 of the statement of claim, namely that the defendants Rajadurai Velupillai and Mukunth Rajadurai cob as Altona Custom Homes and Altona Group of Companies are the individuals to whom Kong-Crete supplied services and materials.
[11] Rajadurai Velupillai and Mukunth Rajadurai did not plead that they carry on business as 6736238 Ontario Inc. and contracted with Kong-Crete through that company.
[12] In the business dealings between Kong-Crete and Rajadurai Velupillai and Mukunth Rajadurai, these defendants do not and have not identified themselves as a corporation and have never disclosed to Kong-Crete the existence of a company identified as 6736238 Ontario Inc.
[13] There is no evidence that 6736238 Ontario Inc. registered “Altona Group” as a name by which it carries on business. In fact, a search of the name and style “Altona Group” disclosed a completely unrelated business. A search of the name “Altona Custom Homes” did not disclose any company or individual carrying on business in that name or style.
[14] Despite their admission in the statement of defence the defendants’ position at trial is that the onus is on the plaintiff to determine with whom Kong-Crete contracted. They assert that Kong-Crete ought to have conducted a search of the Tarion Warranty website and searched the Tarion “builders directory”. The defendants argue that had Kong-Crete done so it would have found the name of the numbered company that carries on business in the name of Altona Custom Homes.
[15] I reject the defendants’ argument on this issue. It is not for the plaintiff to uncover the name of the contracting party. It is for contracting parties to clearly identify themselves. The defendants produced no accoutrements of business that in any way identify them as carrying on business as 6736238 Ontario Inc. Nor is there any evidence that 6736238 Ontario Inc. registered the name in which they carry on business (“Altoma Custom Homes”) under the Business Names Act. The Tarion website builders’ directory is not the legally accepted repository of business style names to be searched to determine whether a style name is a façade for an incorporated entity.
[16] I find that Rajadurai Velupillai and Mukunth Rajadurai were the contracting parties. 6736238 Ontario Inc. was not a contracting party.
b. The contract price
[17] The affidavit and oral evidence of Claude Brunet, president of Kong-Crete, conflicts with the affidavit evidence of Mukunth Rajadurai tendered on behalf of himself and Rajadurai Velupillai.
[18] Mr. Brunet deposes that the value of the services and materials supplied is $42,798.75 including HST. The notes he made when preparing his verbal quote, filed at tab 5 of the plaintiff’s document book, shows that he calculated the price of the job as $37,128.00 plus HST, which adds up to $41,954.64. Mr. Brunet had an informal working relationship with the defendants. He testified that “Muky”, the nickname used by Mr. Rajadurai, phoned him at 6:00 a.m. on January15, 2015 to quote on the job at 47 Canary Crescent. Mr. Brunet testified that he called Muky back with a quote at 6:15 a.m.,that Mr. Rajadurai accepted his quote and that he started work the same day.
[19] The job was completed by January 31, 2015 and on that date Kong-Crete invoiced Altona Custom Homes for $34,525.00 for the main contract work plus $450.00 plus $1,400.00 plus $1,500.00 for three extras plus HST of $4,923.75 for a total of $42,798.75.
[20] These amounts are corroborated by Mr Brunet’s quote and the additional notes filed at tab 7 of his document book showing his calculation of the price for the three extras. At trial Mr. Brunet explained that the extras included the repair of a crack caused by the excavator’s damage to the foundation, plus the addition of footings in front of the garage plus two extra loads of stone to fill in the basement walkup.
[21] I find Mr. Brunet’s evidence of the price he quoted for the contract and the notes made contemporaneously with the verbal contract corroborate the price reflected in Kong-Crete’s invoice of January 31, 2015.
[22] The formation of the contract for this price is further corroborated by the timing of the defendant’s request for a quote, Mr. Brunet’s immediate response and the commencement of the job the same day.
[23] The defendant’s position is that the contract price was $26,000.00. The defendants plead this contract price in paragraph 2 of the statement of defence asserting a contract price of $26,000.00 inclusive of HST. Mr. Rajadurai also deposes to this contract price at paragraph 15 of his first affidavit but does not elaborate.
[24] Mr. Rajadurai does not provide any evidence of probative value to corroborate a contract price of $26,000.00, inclusive or exclusive of HST. Rather, he deposes that the parties agreed to a reduced contract price of $16,000.00.
[25] Mr. Rajadurai’s evidence is that the parties agreed to reduce the contract price to $16,000.00, relying on a March 23, 2015 settlement agreement entered into by the parties, and an invoice prepared by Kong-Crete on the same date to correspond to that settlement.
[26] In response Mr. Brunet deposes that Kong-Crete entered into the settlement agreement because it was in dire financial straits, with its concrete supplier threatening to cut off its supply of concrete unless outstanding invoices were paid. An essential element of the March 23, 2015 settlement agreement was that the settlement funds were to be paid by March 24, 2015. Mr. Brunet deposes that the defendants breached the settlement agreement when they failed to honour the agreement and pay the settlement funds by the next day or at all.
[27] Much of the trial evidence and argument was devoted to the issue of whether the parties had agreed to reduce the contract price to $16,000.00. It is not in dispute that on March 23, 2015 Mr. Brunet and Mr. Rajadurai met at a Tim Horton’s and signed a settlement agreement. The handwritten document provides:
Muky Rajadurian and Claude Brunet agree to amount of $16,000.00 cash to clear up all and any outstanding debts with Kong-Crete Construction and Investment Inc. Muky will pay Claude $16,000.00 cash and Claude will release the lean (sic) off of 47 Canary Cresc. Money to be advanced on the 24th of March in Newmarket.
[28] The agreement is signed by the two individuals. There is an issue as to whether the last sentence regarding payment by March 24, 2015 was added after the fact. Only Mr. Brunet initialed it. Nevertheless, regardless of whether the parties agreed to a condition that payment was required by March 24, 2015, the defendants never paid the settlement amount.
[29] Mr. Rajadurai’s position is that he attempted to meet with Mr. Brunet to make the payment and Mr. Brunet did not return his texts or his phone calls. Mr. Brunet’s evidence is that he responded to Mr. Rajadurai’s text that he would call him back in 15 minutes and when he called back 15 minutes later Mr. Rajadurai expressed reluctance to pay cash to Mr. Brunet directly. Rather he wanted to make the payment to Mr. Brunet’s lawyer in Newmarket.
[30] Mr. Rajadurai’s evidence of the events is different. He states that he called Mr. Brunet and Mr. Bruinet did not call him back. He then tried to call Mr. Brunet’s lawyer to make arrangements to pay and the receptionist took a message. Mr. Rajadurai testified that the lawyer did not call him back until 9:00pm on March 24, 2015 and at that time the lawyer told him that it was a bad deal for his client and Mr. Rajadurai should “hire himself a lawyer”.
[31] This evidence of Mr. Rajadurai, given at trial, contradicts the evidence he gave earlier in his responding affidavit of evidence in chief wherein he deposed that Mr Brunet had changed his mind about accepting the settlement because Mr. Brunet’s wife thought it was a bad deal. In other words, Mr. Rajadurai initially testified that the reason the settlement fell through was because Mr. Brunet’s wife convinced him not to go through with it, but he subsequently testified that the settlement fell through because Mr. Brunet’s lawyer convinced him not to go through with it.
[32] Mr. Rajadurai’s position is that he was ready and willing to pay the settlement funds but that he was prevented from doing so.
[33] I find both of Mr. Rajadurai’s version of the events surrounding his failure to pay the settlement sum less than reliable. He tendered in evidence a bank statement that covers the period of time from March 16, 2015 to April 22, 2015. It does not show a withdrawal of $16,000.00 in cash to pay the settlement sum. Nor is there any evidence of a bank draft or cheque prepared by either of the defendants, or even by the corporation, that the defendants assert contracted with Kon-Crete, to pay the settlement amount. Nor is there any evidence that the settlement sum was delivered to the lawyer’s office or paid at all.
[34] By this time the lien claim had been registered and it is clear from the language of the settlement agreement that an obligation of Kong-Crete upon payment was that the lien claim be discharged. The statement of claim was issued on April 2, 2015 and served shortly thereafter. In the face of litigation the defendants took no steps to move before the court to enforce the settlement agreement as a binding agreement. I find that the defendants breached the settlement agreement by reason of their failure to pay the settlement sum. The settlement agreement is void.
[35] There is yet another basis to reject the defendants’ position that the contract price is $16,000.00. In his evidence Mr. Rajadurai asserts that all of the accounts as between the parties, including the account for 47 Canary Crescent, had been paid in full by February 28, 2015. If that is the case there would have been no reason for the defendants to enter into a settlement agreement to pay an additional $16,000.00. Mr. Rajadurai attempted to characterize the settlement sum of $16,000.00 as payment in respect of a future project. This directly contradicts the wording of the settlement agreement and reduces the reliability of Mr. Rajadurai’s evidence overall.
[36] I find that Mr. Brunet’s notes, taken together with the defendants’ instructions to start work immediate and Kong-Crete’s January 31, 2015 invoice issued promptly upon completion provide reliable evidence that the parties had agreed to the base price quoted of $37,128.00. The reductions in the base price relate to a change in some measurements and I accept Mr. Brunet’s evidence as to the modest extras requested by the defendants and corroborated by photographs and other evidence. I find that the amount of $42,798.75 invoiced reflects the agreed upon contract price plus the agreed upon extras plus applicable HST. I also accept it as evidence of the reasonable value of the services and materials supplied.
[37] According to Mr. Brunet’s evidence, the defendants approved the amount quoted before Kong-Crete started the work. There are no documents subsequent to the issuance of the January 31, 2015 invoice challenging or disputing the quantum. The only subsequent document that addresses the amount invoiced is the March 23, 2015 settlement agreement whereby Kong-Crete was prepared to accept $16,000.00 in full satisfaction if paid by the next day. The settlement amount was not paid and that agreement is void.
[38] The defendants do not allege that the services and materials claimed by Kong-Crete were not supplied. Nor are there any allegations of deficiencies or incomplete work. There is no basis to reduce the agreed upon contract price for services and materials supplied or to set off any amount from that price.
[39] Kong-Crete also provided evidence that the amount charged reflects an appropriate value for the services and materials supplied. Mr. Brunet provided evidence of a quote given for another house to be built by the defendants at 1 Gordon Avenue, based on the same plans only in reverse or mirror image. The price quoted was $36,000.00 before taxes, but if done at the same time as 3 Gordon Avenue, and if the height of the foundation is reduced so that rebar is not necessary, the price would be reduced such that the cost per house would be $32,000.00 plus HST. Mr. Rajadurai had accepted that price in a text message tendered as evidence. Again, this evidence corroborates that the price quoted for 47 Canary Crescent, and the amount ultimately charged for 47 Canary Crescent, was a reasonable value for the services and materials supplied.
[40] While similar fact evidence of this nature is not reliable evidence of the actual value of the services and materials supplied to 47 Canary Crescent, it does suggest that the base amount of $34,535.00 in the January 31, 2015 invoice for 47 Canary Crescent, prior to adding extras and HST, is in the “ballpark”.
[41] I find that the contract price for 47 Canary Crescent was $34,535.00 plus HST of $4,489.55 for a total contract price of $39,024.55. I further find that the extras charged were requested and required by the defendants. The defendants lead no evidence that the amounts charged for extras are excessive. I find that and that the modest amounts charged for extras was reasonable.
[42] In total the contract price including extras and HST is $42,798.75.
c. Amount owing on the contract
[43] Mr. Brunet admits that the practice of Kong-Crete and the defendants on this and prior projects was for payments to be made in cash. He admits to receiving $82,000.00 in cash from the defendants prior to the 47 Canary Crescent project. Mr. Brunet deposes that this sum was in payment of three prior projects:
a) $55,223.10 for 72 Northdale Road (invoice dated December 11, 2014)
b) $26,261.20 for 112 Zaph Ave. (invoice dated October 29, 2014)
c) $508.50 for 17 Larkfield Drive (no invoice; charge was for a load of concrete)
[44] I note that the amounts add up to $81,992.80.
[45] Mr. Rajadurai deposes that the defendants paid Kon-Crete $85,000.00 in cash between October 29, 2014 and February 28, 2015. He has no receipts for these payments and cannot prove that the sums were paid or how they were to be allocated. Kong-Crete admits receiving $82,000.00.
[46] Mr. Rajadurai filed as an exhibit a two-page list of payments made by the defendants to Kong-Crete. It is not an accounting record made in the ordinary course of business. Rather, it appears to be a statement created for this litigation.
[47] According to the statement payments were rounded to the nearest thousand dollars. The statement lists nine properties by address, suggesting that the parties worked together on nine projects. The payments fall into two timeframes.
[48] The first timeframe is from November 18, 2010 to August 2013. According to the statement no payments were made on any of the nine projects between August 13, 2013 and October 29, 2014. I draw the inference that there were no projects ongoing between those two dates.
[49] The second timeframe is from October 29, 2014 to February 28, 2015. The payments reflected in the statement (and in parenthesis the amounts invoiced) are:
a) 112 Zaph Ave.: $20,000.00 (Kong-Crete invoiced $55,223.10)
b) 72 Northdale Road: $39,000 (Kong-Crete invoiced $26,261.20)
c) 47 Canary Crescent: $26,000 (Kong-Crete invoiced $42,798.75).
[50] The flaw in the defendants’ position on the allocation of payments is that the amounts allegedly paid for each of these projects are significantly lower than the amounts Kong-Crete invoiced for the work.
[51] Mr. Bruinet’s allocation of the $82,000.00 cash payments that he admits Kong-Crete received is more consistent with the pattern of behaviour of the parties. Since no jobs were ongoing for over a year after 17 Larkfield was completed in mid-2013, I accept that the sum of $82,000.00 in cash was applied to the projects that fall into the second timeframe. The only exception is the $508.50 allocated to 17 Larkfield by Mr. Brunet out of the $82,000.00 for the supply of specific materials as an extrarequested by the defendants.
[52] Work on 47 Canary Crescent did not begin until January 22, 2015, over a month after the second of the two invoices for the 112 Zaph Avenue and the 72 Northdale Road projects. Mr. Brunet’s evidence is that he has not received any payment on account of the 47 Canary Crescent project. He did not receive a retainer and he did not receive any payment of the amount invoiced.
[53] I find that Mr. Brunet’s allocation of the $82,000.00 cash received from October 29 2014 to February 28, 2015 to the oldest of the outstanding accounts before applying it to the 47 Canary Crescent outstanding account is reasonable. The defendants provided no evidence or receipt showing that any of the cash payments were in payment for the 47 Canary Crescent project.
[54] I further find that the quantum of cash paid is $82,000.00 as acknowledged by the plaintiff and not $85,000.00 as asserted by the defendants. The onus of proving payment is on the party asserting and relying on the evidence of payment. The affidavit and viva voce evidence of Mr. Brunet and Mr. Rajadurai conflicts. I prefer the evidence of Mr. Brunet as more reliable, based on the corroborating invoices.
[55] A contracting party who pays in cash and fails to obtain a receipt takes a risk. The purpose of a written receipt is to prove that a cash payment was made. In the absence of written receipts, or an admission of payment by the receiving party, the defendant has not satisfied the onus of proving the alleged payment of $26,000.00 on the 47 Canary Crescent project.
[56] Further, I find that the evidence of Mr. Rajadurai that he paid $26,000.00 cash for the 47 Canary Crescent project is not credible. On the one hand he deposes that by February 28, 2015 he had paid Kong-Crete $26,000.00 for the contract, which would reflect what the defendants assert as the full contract price for 247 Canary Crescent. On the other hand, Mr. Rajadurai’s evidence is that on March 23, 2015 he agreed to pay $16,000.00 in full satisfaction of the contract for 47 Canary Crescent. If the contract price had been $26,000.00 and he had paid it in full by February 28, 2015, he would have had no reason to sign a settlement agreement on March 23, 2015 to pay an additional $16,000.00 for the 47 Canary Crescent project.
[57] As to the small difference between the $82,000.00 that Mr. Brunet admits receiving and his allocation of $81,992.80 to the oldest outstanding invoices and the extra for the earlier 17 Larkfield Drive project, I find that the numbers are consistent with the defendants’ practice of rounding payments to the nearest thousand dollars, without matching cash amounts to actual invoices.
[58] I find that the $82,000.00 in cash paid by the defendants to Kong-Crete was paid for invoices issued prior to the commencement of the supply of services and materials for the 47 Canary Crescent project and that it was for payment for the prior jobs at 72 Northdale, 112 Zaph Ave. plus a small extra for 17 Larkfield.
[59] I find that the defendants have made no payments to the plaintiff on the 47 Canary Road contract.
d. Timeliness of the construction lien
[60] Kong-Crete supplied services and materials up to January 31, 2015. As a subcontractor the Act provides that a construction lien must be preserved by registration within 45 days of the last supply of services and materials. Kong-Crete registered its construction lien on March 13, 2015 within the 45 day period for registration.
[61] The Act requires a lien claimant to perfect the lien by issuing an action within 90 days of the last supply of services and materials. Kong-Crete registered the certificate of action on April 8, 2015, also within the time prescribed by the Act.
[62] The defendants’ claim that the lien was preserved or perfected out of time fails.
e. Liability of the owner
[63] Kong-Crete registered its construction lien against the owner, Suganthini Ganthithasan, and served the statement of claim on him. He did not defend and Suganthini Ganthithasan was noted in default on August 11, 2015. He took no steps to set aside the default and has not participated in these proceedings.
[64] Kong-Crete claims against the owner on many fronts, including quantum meruit and unjust enrichment. The pleadings relevant to the owner allege that the improvement was made at the request of the owner and with his consent. In the alternative the plaintiff claims holdback from the owner.
[65] A party in default is deemed to have admitted the allegations pleaded. I find that the owner, Suganthini Ganthithasan, is deemed to have admitted the allegations as to the improvement having been made at his request and with his consent.
[66] There is no evidence before the court as to the quantum of holdback that the owner was required to retain. However, I find that given the deemed admissions, the owner admits to a direct contract or alternatively to having been unjustly enriched.
[67] I find that Suganthini Ganthithasan is liable to Kong-Crete for the amount claimed and that the lien remedies claimed are appropriate if the amounts directed to be paid to Kong-Crete remain unpaid.
IV. Conclusion
[68] For the reasons expressed I find that Suganthini Ganthithasan, Rajadurai Velupillai and Mukunth Rajadurai are jointly and severally liable to Kong-Crete Construction & Investment Corp. for the sum of $42,798.75 plus prejudgment interest at the Courts of Justice Act rate of 1.3 percent (1.3%) from March 3, 2015 to July 13, 2016 plus post-judgment interest at the post-judgment rate of 2 per cent (2%) from July 14, 2016 to the date of payment.
[69] I further find that if the amount awarded is not paid then the lien remedies claimed by the plaintiff apply and the property shall be sold in accordance with the procedures prescribed by the Construction Lien Act, and the proceeds applied as prescribed by the Act.
V. Costs
[70] Costs submissions may be made upon disposition of the trial on July 13, 2016.
Master C. Albert .
Released: July 13, 2016
Appendix “A”
Procedural issues, rulings and reasons
Issue #1: Defendant’s first request for leave to admit additional evidence
The defendant sought leave to tender new evidence at trial in the form of a supplementary responding affidavit of evidence in chief of the defendant Mukunth Rajadurai.
By trial directions given on February 29, 2016 I fixed the date for today’s summary trial and also ordered a timetable for the pre-trial exchange of affidavit evidence in chief and documents to be relied on at trial. Paragraph 4 of the February 29, 2016 order provides:
Summary trial: Trial of the claim and counterclaim shall be by way of summary trial. The summary procedures described in rule 76 apply unless otherwise ordered. Affidavits of evidence in chief must comply with the rules of trial evidence: hearsay is not permitted. Affidavits may not exceed 30 pages in length excluding exhibits. Where a witness is not co-operative such that an affidavit of evidence in chief is not available and the witness must be summonsed then counsel must serve a statement outlining the anticipated evidence of the witness and where this order refers to “affidavit of evidence in chief” it shall be deemed to include such an outline of evidence prepared where the witness is unco-operative and must be summonsed. Evidence in chief shall be served according to the following timetable:
(a) The plaintiff’s sworn affidavits of evidence in chief shall be served by May 20, 2016.
(b) The defendants’ sworn affidavits of evidence in chief shall be served by June 3, 2016.
(c) The plaintiff’s reply affidavits of evidence in chief shall be served by June 17, 2016.
(d) All affidavits must be paginated with each page of the affidavit and exhibits given a unique page number. Affidavits of evidence in chief (original plus one copy) must be filed by June 24, 2016. Affidavits that do not comply with this direction may not be relied on at trial.
(e) Where a party seeks to cross-examine the deponent of an affidavit of evidence in chief at trial then notice of intention to cross-examine at trial must be served and filed at least 10 days before the first day of trial. In the absence of such a notice the witness need not attend at trial.
(f) There will be no examination in chief of affiants at trial. Cross-examination at trial is limited to one hour per witness unless leave is granted to conduct additional cross-examination. Redirect examination of 15 minutes shall be permitted at trial.
The Act requires that construction lien claims be resolved in as summary a manner as is suitable to meet the needs of the case. The amount in issue is modest. The issues are not complex.
The defendants have had sufficient time to prepare for this trial and tender the evidence they intend to rely on.
In his submissions seeking leave to introduce evidence after the ordered deadline, counsel for the defendant argued that the proposed new evidence was for the purpose of introducing a 2009 cheque that had only recently been located by the defendant. I note that the 2009 is six years prior to the date of commencement of the supply of services and materials claimed in the construction lien that is before the court. Counsel for the defendant provided no evidence to explain the reason for the late introduction of the proposed evidence but instead asserted a factual foundation from the counsel table without evidence.
I allowed defendant’s counsel the indulgence of giving evidence personally from the counsel table (a practice that is not permitted by the rules) as to the circumstances surrounding the request to introduce the proposed new evidence at this late date. He explained that the existence of the six-year-old cheque had only just been discovered as an accounting entry by the defendant’s accountant and that upon learning of it in early June 2016 the defendant sought a copy from his bank.
The proposed new evidence is problematic for several reasons:
a. First, the defendant’s attempt to introduce the supplementary affidavit without an evidentiary foundation as to why it is tendered so late in the day and long after the deadline for exchanging affidavit evidence in chief for trial, is enough to exclude it;
b. Second, in his argument seeking leave defendant’s counsel referred only to the issue of the cheque. The cheque is mentioned in only two paragraphs and one exhibit of the proposed new evidence. The supplementary affidavit also includes one other paragraphs and two other exhibits on issues distinct from the cheque.
c. Third, the court set out in clear detail by way of a procedural order issued February 29, 2016 after a hearing attended by counsel the protocol to be followed for the exchange of evidence in advance of trial. None of the evidence in the defendant’s proposed supplementary affidavit is evidence that could not have been tendered by the deadline ordered in the February 29, 2016 procedural order. The cheque in issue is from 2006. The statement of claim was served on the defendant in or about April or May 2015. Clearly there was sufficient time for the defendants to identify and locate the cheque prior to the June 2016 deadline for filing affidavit evidence in chief. Regarding the text messages and the bank statement attached as the other two exhibits to the supplementary affidavit for which the defendant seeks leave, they were created in March and April 2015, over one year prior to the filing deadline, and could have been included in the defendant’s responding affidavit by the ordered deadline.
I conclude that it was merely delay on the part of the defendants or their counsel or both that created the need to seek leave to introduce new evidence at the opening of trial after the plaintiff had already tendered its reply evidence in chief by the deadline ordered in the February 29, 2016 procedural order.
However, the plaintiff did not oppose leave to admit the defendant’s supplementary affidavit evidence provided he was given the opportunity to lead evidence in chief in reply from the plaintiff as part of the plaintiff’s case in chief, provided he could cross-examine the deponent on the affidavit and provided paragraphs 3 and 4 and exhibit “A” (all concerning the 2006 cheque) were deleted from the supplementary affidavit.
The defendant accepted those conditions and on that basis and with those conditions I granted the defendant the indulgence and leave to tender the supplementary affidavit of evidence in chief at trial.
Issue #2: Defendant’s second request for leave to admit additional evidence
The defendant sought leave to admit as evidence the plaintiff’s entire affidavit of documents. An affidavit of documents contains all of a party’s documents. Not all of those documents are required for trial.
The practice that has developed in construction lien reference trials in Toronto over the past several decades is for the court to make procedural orders to narrow the issues and the evidence required for trial. This is consistent with section 67 of the Construction Lien Act and the reference rules. Together they require the court to impose a procedure that is as expeditious and cost-efficient as is suitable to meet the needs of the case.
For this reason the practice that developed is to require the parties to narrow the documents required for trial and deliver them in advance of trial in the form of a document book. Joint documents books are encouraged. When a trial is conducted as a summary trial with affidavit evidence in chief, documents attached as exhibits to such affidavit evidence need not also be included in the document book. Documents that are not required for trial, and multiple copies of the same documents, should not clutter up the trial record.
Paragraph 6 of the February 29, 2016 pretrial procedural order provides:
Document Books:
(a) Each party shall prepare four (4) sets[^3] of document books containing all documents to be relied on at trial. Documents attached as exhibits to affidavits filed as evidence in chief need not be duplicated in the document books but shall be treated as if they were included in the document book(s) for purposes of these directions. Each document book shall be titled “Document Book” and shall be indexed, tabbed and every single page of the document book must be paginated with a unique page number. Only documents contained in a document book prepared in compliance with these directions may be tendered in evidence at trial, except with leave of this court.
(b) Document books must be exchanged and the original plus one copy filed with Assistant Trial Co-ordinator for construction liens, 6th floor, 393 University Avenue, Toronto by June 24, 2016.
(c) The authenticity and admissibility of each document in the document books shall be deemed admitted, pursuant to rules 51.01, 51.02 and 51.03, and shall be admissible at trial unless the party objecting to authenticity or admissibility serves a written Letter of Objection, within 10 days following the date the document books are served, stating the documents to which objection is taken and the specific reason for objection in each case, in which case the court will rule on authenticity or admissibility at trial. Otherwise the documents in the document books shall be admissible in evidence without further formal proof.
(d) Evidence and argument regarding the truth of the contents of documents may be presented at trial.
An affidavit of documents is not appropriately an exhibit at trial in a construction lien reference trial.
When I asked defendant’s counsel to identify the documents in the plaintiff’s affidavit of documents that he intends to rely on and that were not also in the trial record already as exhibits to affidavits of evidence in chief or in the document books prepared and exchanged for trial, counsel could not identify them. I asked defendant’s counsel to list the documents in the plaintiff’s affidavit of documents that he intended to put to the witness. He listed 10 documents. I then reviewed each of these documents with him and together with both counsel determined that all but one of the documents defendants’ counsel intended to put to the witness had already been included either as an exhibit to an affidavit of evidence in chief to be used at trial, or in a document book prepared for trial.
I refused leave for the defendant to tender as evidence the plaintiff’s affidavit of documents because all but one of the documents the defendant’s counsel sought to rely on were already before the court.
I then asked counsel if he wished to seek leave to admit the one document that was not part of an affidavit or document book and he declined to do so.
2016 ONSC 4588
COURT FILE NO.: CV-15-525293
DATE: July 13, 2016
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kong-Crete Construction & Investment Corp.
Plaintiff
- and -
Suganthini Ganthithasan, Rajadurai Velupillai cob as Altona Custom Homes and Altona Group of Companies and Mukunth Rajadurai cob as Altona Custom Homes and Altona Group of Companies
Defendants
REASONS FOR JUDGMENT
Master C. Albert
Released: July 13, 2016
[^1]: Defendants other than Suganthini Ganthithasan [^2]: R.S.O. 1990, c.C.30 [^3]: The document book for the court must contain original documents, unless originals are no longer available. The other document books are for use by the witness when testifying, and for counsel.