CITATION: MacNamara v. 2087850 Ontario Ltd, (Strathcona Construction) 2017 ONSC 499
COURT FILE NO.: CV-14-516367
DATE: 20170210
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tyler MacNamara
Plaintiff
– and –
2087850 Ontario Ltd., o/a Strathcona Construction, Robert Koblinsky and Richard Morris
Defendants
Crawford Smith and Alexandra Shelley, for the Plaintiff/Moving Party
Michael Farace, for the Defendants/Responding Parties 2087850 Ontario Ltd., o/a Strathcona Construction, Robert Koblinsky
HEARD: January 17, 2017
judgment
AKBARALI, J.:
Overview
[1] The plaintiff, Tyler MacNamara, owns a property in Caledon. He wanted to renovate it. Members of his family had worked with a general contractor, the defendant, 2087850 Ontario Ltd o/a Strathcona Construction (“Strathcona”), before. Mr. MacNamara trusted Strathcona. He turned to Strathcona for help with the renovation.
[2] Strathcona’s representative and independent contractor, the defendant Richard Morris, provided design and site supervision for the renovation. The defendant Robert Koblinsky is the sole shareholder, officer and director of Strathcona, and its sole signing officer. He was responsible for “all projects from the office side” at Strathcona. I refer to Mr. Koblinsky and Strathcona collectively as the Strathcona defendants.
[3] There was no written contract, written scope of work or written budget for the project, although there were architect’s plans. Strathcona sent its labourers, its independent contractor Mr. Morris, and its sub-trades to perform work at the site in Caledon and it invoiced Mr. MacNamara. Mr. MacNamara paid those invoices.
[4] Two and a half years into the over $6 million project, Mr. MacNamara grew concerned that the project was taking too long and costing too much. He hired a cost consultant, Niall Finnegan, to investigate. Based on Mr. Finnegan’s preliminary investigation, Mr. MacNamara replaced Strathcona with another general contractor, Bachly Construction, and commenced this action alleging, among other things, civil fraud against the defendants in relation to a fraudulent invoicing scheme.
[5] Mr. MacNamara now brings this motion for summary judgment on his claim against the Strathcona defendants. He also seeks a summary dismissal of Strathcona’s counterclaim against him relating to an unpaid invoice. Mr. Morris did not take part in this motion.
[6] I find that this action, based largely on documentary evidence, is appropriate for summary judgment. I conclude that Mr. MacNamara is entitled to summary judgment on his claim. He has established that he had a contract with Strathcona and that Strathcona perpetrated a fraudulent invoicing scheme. I conclude that this is one of the rare cases in which piercing the corporate veil is warranted, because Mr. Koblinsky exercised complete control over Strathcona and employed Strathcona as an instrument of fraud.
[7] I conclude that Strathcona’s counterclaim should be dismissed with the exception of a few claims that are established on the record. Apart from those few claims, there are significant concerns with the invoice for which Strathcona claims payment; the back-up documentation does not establish Strathcona’s entitlement to bill Mr. MacNamara for the amounts on the invoice. The evidence does not establish that those amounts were paid.
ISSUES
[8] The issues before me are:
a. Is the evidence of Mr. MacNamara’s cost consultant, Niall Finnegan, expert evidence, and if so, is it properly admissible?
b. Is there a genuine issue for trial with respect to whether Strathcona is liable for civil fraud?
c. If Strathcona is liable for civil fraud, is there a genuine issue for trial as to whether Mr. Koblinsky personally liable; in other words, is this an appropriate case in which to pierce the corporate veil?
d. Is there a genuine issue for trial with respect to the amounts claimed by Strathcona in its counterclaim?
Is this an appropriate case for summary judgment?
[9] Summary judgment is appropriate where there is no genuine issue for trial. This will be the case where the summary judgment process provides me with the evidence required to fairly and justly adjudicate the dispute, by allowing me to make the necessary findings of fact and to apply the law to the facts, and where summary judgment is a timely, affordable and proportionate procedure: see Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 49-50 and 66.
[10] Mr. MacNamara argues that this is an appropriate case for summary judgment because his evidence makes out the elements of civil fraud and quantifies his loss. I am confused by the position taken by the Strathcona defendants. Their factum includes the heading “Summary Judgment Not Appropriate” but there is no argument as to why summary judgment is inappropriate. Moreover, the Strathcona defendants urge me to make a positive finding that there was no fraudulent invoicing scheme.
[11] The evidence relating to the alleged fraudulent invoicing scheme, and the counterclaim in respect of the alleged unpaid invoice, is largely documentary in nature. I have a full evidentiary record, including affidavits from Mr. MacNamara and Mr. Koblinsky attesting to the arrangements between Mr. MacNamara and Strathcona. I have affidavits from Mr. Finnegan that describe the discrepancies between the invoices and the back-up documentation, and the manner in which HST was dealt with in the invoices, and that quantify the loss Mr. MacNamara suffered. I also have the transcripts of the cross-examinations of Mr. MacNamara, Mr. Koblinsky, Mr. Finnegan and Mr. Morris. Based on this record I am able to find the necessary facts and apply them to the law to resolve this action and counterclaim on a summary basis. Summary judgment is therefore a timely, affordable and proportionate procedure.
Is Mr. Finnegan’s Evidence Admissible?
[12] As a preliminary matter, I must consider the Strathcona defendants’ objection to Mr. Finnegan’s evidence. Mr. Finnegan filed three affidavits on this motion in which he explains the review he undertook of the Strathcona invoices, his comparison of those invoices to the underlying invoices of the sub-trades, and his review of the manner in which HST was billed. In his evidence, Mr. Finnegan quantifies the loss that he calculated Mr. MacNamara suffered by reason of the invoicing irregularities.
[13] The Strathcona defendants allege that Mr. Finnegan has offered expert evidence which they argue I should decline to admit, or to which I should attach no weight. They attack Mr. Finnegan’s credentials to offer what they say is opinion evidence, in particular as it relates to HST. They also attack Mr. Finnegan’s impartiality because Mr. Finnegan has done significant work for certain companies which are related to Mr. MacNamara that Mr. Finnegan did not disclose.
[14] At the outset of the motion, I sought to clarify with Mr. MacNamara’s counsel the capacity in which Mr. Finnegan’s evidence was being put forward. Mr. MacNamara filed four motion records on this motion, and it was not until the third affidavit proffered by Mr. Finnegan, filed in the third motion record, that Mr. Finnegan filed an acknowledgement of expert’s duty and attached his curriculum vitae. Counsel argued that almost all of Mr. Finnegan’s evidence is fact evidence, but he identified three areas in which he said Mr. Finnegan arguably strays into opinion evidence:
a. Mr. Finnegan’s evidence as to the proper method for a general contractor to charge HST when the general contractor’s invoice includes the invoices of sub-trades who have charged HST on their invoices;
b. Mr. Finnegan’s conclusion that the invoicing scheme that Strathcona engaged in was fraudulent; and
c. Mr. Finnegan’s evidence that, in his experience, a general contractor always includes as back-up to its invoices the invoices of the sub-trades that are being passed on to the client. Counsel argued that this evidence might better be characterized as fact evidence, since it is based on Mr. Finnegan’s experience, but counsel allowed, generously in my view, that this might be considered opinion evidence.
[15] I asked whether the Strathcona defendants accepted this characterization of Mr. Finnegan’s evidence. They did not accept it. In their view, all of Mr. Finnegan’s evidence was expert evidence. However, when I asked counsel to explain with particularity what else of Mr. Finnegan’s evidence was opinion evidence and why, counsel diverted to submissions about Mr. Finnegan’s alleged lack of impartiality.
[16] I conclude that Mr. Finnegan’s evidence is almost entirely fact evidence. Mr. Finnegan was the person who actually reviewed the invoices and compared them to the back-up documentation. Almost all of his work consisted of document review and math.
[17] Counsel for the Strathcona defendants also argues, inconsistent with his other submissions, that Mr. MacNamara could have undertaken the analysis that Mr. Finnegan did, or that I could have, such that I have no need for expert evidence. This argument is consistent with my conclusion that Mr. Finnegan’s evidence is almost entirely fact evidence. Mr. Finnegan’s analysis did not require particular expertise, but it was necessary for someone to compare Strathcona’s invoices to the back-up documentation and offer evidence on the discrepancies. That it was Mr. Finnegan’s task makes Mr. Finnegan a fact witness, not an expert. It was also far preferable that Mr. Finnegan undertake the task than that this court attempt its own reconciliation of the documents after the close of argument. Mr. Finnegan was available to be cross-examined on what he did, and the Strathcona defendants were able respond to his analysis through their own materials – important procedural rights that would not have been available to the Strathcona defendants if this court did its own analysis.
[18] With respect to the areas identified by Mr. MacNamara’s counsel as opinion evidence, I find that:
a. Mr. Finnegan is not properly qualified to opine on the proper method for a general contractor to charge HST. I do not rely on his evidence in this regard. However, this conclusion does not extend to Mr. Finnegan’s evidence with respect to how HST was charged by Strathcona, and his calculations in relation to HST, about which I will say more below. I thus do not allow the following evidence, all of which is from Mr. Finnegan’s affidavit sworn November 10, 2016: the last sentence of para. 40, the last sentence of para. 42 and the entirety of para. 43.
b. Mr. Finnegan is not properly qualified to opine on whether Strathcona’s invoicing is a fraudulent scheme. In any event, that is the ultimate issue for this court. I do not admit his conclusions of fraud.
c. Mr. Finnegan’s evidence, in para. 10 of his affidavit sworn November 10, 2016, that he has “never seen a cost-plus contract where the General Contractor did not submit the back-up invoices to support their own invoices” is fact evidence, based on his experience as a cost-consultant on thousands of projects. It is thus admissible.
[19] I decline to reject Mr. Finnegan’s evidence on the basis that he is not impartial, as urged by the Strathcona defendants. Mr. Finnegan’s evidence is easily tested for accuracy – one need only compare his figures with the underlying documentation. It is his factual reconciliation of the Strathcona invoices to the underlying documents and his math on which I rely, and which is easily verifiable. The Strathcona defendants mount no serious challenge to Mr. Finnegan’s analysis. I conclude Mr. Finnegan’s evidence is reliable and I accept his analysis of the reconciliation of the invoices to the back-up documentation and his calculations.
Is there a genuine issue for trial with respect to Strathcona’s liability for civil fraud?
Was there a contract between Mr. MacNamara and Strathcona?
[20] The Strathcona defendants allege that, as a threshold matter, there can be no civil fraud because there was no contract against which Strathcona’s invoices could be compared to conclude its billing was fraudulent. There was no written contract, and they argue that all Mr. MacNamara’s discussions were with Strathcona’s representative, Mr. Morris; presumably by so arguing they mean to disavow those communications as binding them.
[21] According to the Strathcona defendants, there was an “arrangement” between the parties under which Strathcona’s obligation was to arrange for its labourers, its independent contractor and its sub-trades to work at the site in Calendon. They argue the work was done on an “ad hoc” basis. The Strathcona defendants claim this created no contractual relationship. Instead, they argue, the arrangement was that Strathcona would bill Mr. MacNamara for work done however it wished. Mr. Koblinsky testified that “[he] could have charged Mr. MacNamara whatever [he] felt like”. It would then, they argue, be up to Mr. MacNamara to challenge each invoice as it was delivered and any dispute could be resolved on a quantum meruit basis[^1].
[22] I reject this argument. A two and a half year project, at a cost of over $6 million, with architect’s plans, and a site supervisor is not work on an “ad hoc” basis. It defies common sense that a project of this scope and value would be undertaken “ad hoc” and on the basis that the general contractor could charge “whatever it felt like”.
[23] Mr. MacNamara’s evidence is that he understood he would be billed Strathcona’s costs plus a mark-up. I accept this evidence. Mr. MacNamara did not know exactly what the mark-up would be, but he expected there would be one.
[24] This evidence is consistent with the Strathcona defendants’ own evidence and the positions they have taken in this lawsuit. They admitted, in para. 24 of their statement of defence, that there was an understanding between the parties that Strathcona would charge for its costs of its sub-trades, plus a mark-up, which the Strathcona defendants describe as 25% (5% for Mr. Morris, 10% for Strathcona’s overhead and 10% for Strathcona’s profit).
[25] At para. 6 of their statement of defence, the Strathcona defendants admit that Mr. Morris, with whom Mr. MacNamara discussed the basis for billing, was the project manager and site supervisor on behalf of Strathcona, and that all communication on behalf of Strathcona with Mr. MacNamara was carried out through Mr. Morris. This is important because, at para. 4 of Mr. Koblinsky’s supplementary affidavit sworn November 23, 2016 at Tab 1 of his Supplementary Responding Motion Record, he deposes that he was told by Mr. Morris that Strathcona was to “bill with mark-up as needed”. The Strathcona defendants cannot both accept Mr. Morris as their representative and argue they were not bound by his discussions with Mr. MacNamara. They were bound.
[26] In view of this evidence and the admissions in the statement of defence, I find that the contract between the parties required Strathcona to bill its actual costs plus a mark-up. The mark-up Strathcona charged was 25%. Mr. MacNamara does not challenge the mark-up in this proceeding.
Strathcona’s Invoicing Irregularities
[27] Strathcona’s invoicing irregularities fall into two overarching categories: (i) inflated charges in respect of sub-trade accounts, and (ii) double-counting of HST. The irregularities are set out in detail in Mr. Finnegan’s report[^2] which I accept, and his affidavits, which I also accept (except for the evidence I have already found he was not qualified to give).
[28] In some cases, Mr. Finnegan performed his analysis by comparing Strathcona’s invoices against the back-up documentation that Mr. Finnegan was able to obtain from the sub-trades directly. In other cases, he compared Strathcona’s invoices to the back-up documentation Strathcona produced. Where Mr. Finnegan was able to obtain information from a sub-contractor directly about its billings, I find that information to be more reliable than the evidence the Strathcona defendants have produced about what Strathcona was billed. I reach this conclusion in part because the sub-contractors are uninterested in this dispute, and also because of the problems with the back-up documentation produced by the Strathcona defendants, which I describe below. Moreover, there is no evidence before me of any problems with the sub-contractors’ records, while Mr. Koblinsky deposed that there is documentation Strathcona could not find.
[29] A few examples of the invoicing irregularities will suffice to demonstrate my conclusion that Strathcona’s invoices inflated the amounts that Mr. MacNamara owed.
[30] According to a Design & Consultation Agreement dated February 9, 2011, Neff of Toronto (referred to before me as Neff Kitchens) would provide design and consulting services in respect of the project, but before the commencement of its work, it would require a $10,000 flat fee retainer. In his affidavit, Mr. Koblinsky admits no contract with Neff Kitchens was executed. In Strathcona invoice no. 435 dated Feb 23, 2011, Strathcona billed Mr. MacNamara $12,500 in respect of Neff Kitchens ($10,000 plus a 25% mark-up) which was never returned. Neff Kitchens confirmed to Mr. Finnegan that it had not charged any money in respect of the project.
[31] The Strathcona defendants say that the $10,000 deposit would have become payable and they were entitled to bill for amounts that would become owing because it was not their responsibility to finance Mr. MacNamara’s renovation. I reject this argument. A deposit, properly billed, from a sub-trade might well be an appropriate cost on a cost plus mark-up contract. But the charge in respect of Neff Kitchens was invoiced in February 2011 and still had not been incurred by the time Bachly took over the job in June 2013. No contract with Neff Ktichens had yet been signed. Strathcona was not entitled to invoice for this amount.
[32] Strathcona also billed Mr. MacNamara in respect of Tiltco, another sub-trade. Mr. Finnegan was able to obtain Tiltco’s invoices from Tiltco directly. Tiltco also confirmed that it only received payments for the amounts invoiced. Tiltco’s records show that it billed Strathcona $535,938.85 (before HST). Strathcona billed Mr. MacNamara $728,889.26 in respect of Tiltco, before accounting for HST and Strathcona’s mark-up.
[33] The Strathcona defendants claim these numbers are wrong. They calculate Tiltco’s total billings to it at $933,740.44 (including HST). On their analysis, they undercharged Mr. MacNamara.
[34] The documentary evidence put forward by the Strathcona defendants does not support their argument.
[35] The Strathcona defendants’ documentary evidence includes both invoices and orders from Tiltco. Some orders show a balance due but also indicate that a lesser amount is payable upon the order being placed. The orders are therefore not bills; they do not represent that a charge has been incurred and is owing. All the bills Tiltco produced directly to Mr. Finnegan were invoices; none were orders. The invoices are Tiltco’s bills.
[36] However, the documents the Strathcona defendants allege show billings of $933,740.44 include both invoices and orders, and sometimes multiple orders bearing the same number. The Strathcona defendants thus improperly counted, and sometimes double-counted, orders that had not been invoiced, or not yet been invoiced, in their calculations of Tiltco’s total billings.
[37] These irregularities occurred with the accounts of other sub-trades. There were also other examples of invoicing irregularities, including: (i) invoices relied on by Strathcona to substantiate its billing that were paid by Bachly, not Strathcona, (ii) credits that were given to Strathcona by the sub-trades but not passed on to Mr. MacNamara, and, (iii) accounts of sub-trades for which there is no back-up documentation whatsoever.
[38] The double-counting of HST was described by Mr. Finnegan in his affidavits, report and calculations. It was also admitted by the Strathcona defendants. Mr. Koblinsky deposes that Strathcona would receive an invoice from a sub-trade that included HST. It would then gross up the total amount of the invoice (including HST) by 25%. It would then include this grossed up number as a line item, without back-up documentation, on Strathcona’s invoice to Mr. MacNamara. It would then charge HST on the entirety of the invoice. One does not need to be a tax expert to recognize that Mr. MacNamara twice paid an amount corresponding to HST on the sub-trades’ invoices.
[39] Mr. Koblinsky also gave evidence that Strathcona claimed input tax credits in respect of the HST on the invoices Strathcona received from its sub-trades. Thus, Strathcona billed Mr. MacNamara for the HST it paid on the sub-trades’ invoices even though it recovered this amount from the input tax credits.
[40] The Strathcona defendants say there is nothing illegal about this, and argue Mr. MacNamara required a tax expert to give opinion evidence that Strathcona was wrong to charge HST as it did, in effect billing Mr. MacNamara twice. I reject this argument. Mr. MacNamara was twice charged and twice paid an amount corresponding to HST on the sub-trades’ invoices. By virtue of claiming input tax credits, Strathcona did not suffer the cost of the HST charged to it on the sub-trades’ invoices. It is clear that Strathcona kept the payment in respect of the second charge. I do not need a tax expert to give evidence that HST is only payable once on a service. The second charge was not HST, since Strathcona cannot be the ultimate beneficiary of HST; it was a charge which Strathcona was not entitled to bill.
[41] Moreover, I note that by charging the 25% mark-up on the entirety of the sub-trades’ invoices, including the HST, Strathcona improperly inflated the mark-up to which it was entitled. The HST on the sub-trades’ invoices was not a cost to Strathcona, which claimed input tax credits, so there was no basis to charge a mark-up on it. This amount is captured in Mr. Finnegan’s calculation of double-counted HST, although it is really better described as an improper mark-up on the sub-trades’ invoices.
The Test for Civil Fraud
[42] The question is whether these facts establish Strathcona’s liability for civil fraud.
[43] In Hryniak at para. 87, the Supreme Court of Canada reiterated the elements of the tort of civil fraud, which must be proven on a balance of probabilities: (i) a false representation by the defendant; (ii) some level of knowledge of the falsehood of the representation on the part of the defendant (whether knowledge or recklessness); (iii) the false representation caused the plaintiff to act; and (iv) the plaintiff’s actions resulted in a loss.
[44] I am satisfied that Strathcona’s invoices constituted false representations. The invoice was designed to look like each sub-trade had billed the amounts listed on the face of the invoice. The failure to include back-up documentation concealed the falsity of the representations.
[45] Strathcona had knowledge of the falsity of the representations. It received and paid the invoices from the sub-trades; it therefore knew what it had actually been billed. Strathcona’s invoices to Mr. MacNamara were inconsistent with its actual costs. It had a costs plus mark-up contract with Mr. MacNamara. It knew it had no basis on which to charge Mr. MacNamara in the manner in which it did.
[46] Strathcona also knew it was invoicing Mr. MacNamara twice for an amount corresponding to HST on the sub-trades’ invoices while claiming input tax credits in respect of the HST on the sub-trades’ invoices. Strathcona thus knew it was artificially inflating the invoices to Mr. MacNamara beyond what he had agreed to pay.
[47] The false representations caused Mr. MacNamara to act. He trusted Strathcona and in reliance on the invoices he received, he paid the invoices in full. As was the case in Ottawa Community House Corp. v Foustanellas, 2013 ONSC 973 at para. 75, aff’d 2015 ONCA 276, 125 O.R. (3d) 539, the false invoicing scheme was intended to induce, and succeeded in inducing, Mr. MacNamara to pay more for Strathcona’s services than he owed under the contract.
[48] The Strathcona defendants argue that there can be no summary judgment for civil fraud because of a “fatal flaw” in Mr. MacNamara’s affidavits: Mr. MacNamara never deposes that he was defrauded or suffered loss. According to the Strathcona defendants, Mr. MacNamara has never complained about fraud.
[49] This entire action is a complaint about fraud. Mr. MacNamara’s evidence (his own and that which he offers on this motion) establishes the facts, including his loss. It is for me to determine if the facts establish civil fraud at law.
[50] I am satisfied that this false invoicing scheme amounted to fraud. This was not a case of isolated errors in the invoicing, but a persistent scheme to overcharge Mr. MacNamara and conceal the overcharging by failing to provide the back-up documentation to Strathcona’s invoices.
[51] Because I have accepted the analysis and calculations contained in Mr. Finnegan’s report, I conclude that the amount of Mr. MacNamara’s loss as a result of the fraudulent invoicing scheme is $1,387,902.
Is Mr. Koblinsky personally liable for Strathcona’s civil fraud?
[52] Mr. MacNamara argues this is the rare case where it is appropriate to pierce the corporate veil to make Mr. Koblinsky personally liable for Strathcona’s civil fraud. Mr. Koblinsky does not address this argument in his factum, nor did his counsel address it in oral argument.
[53] In TransAmerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (S.C.J.) at paras. 22-23; aff’d [1997] O.J. No. 3754 (Ont. C.A.), Sharpe J. (as he then was) held that “courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct”. See also Terra Farm Ltd. v. Park Stud Inc., 2010 ONCA 422 at para. 34.
[54] The first element of the test requires more than ownership; it is necessary to show that there is complete domination of the corporation, and the corporation does not function independently: see H.S.C. Aggregates Ltd. v. McCallum, 2014 ONSC 6214 at para. 126.
[55] In this case, the first element of the test is satisfied. Mr. Koblinsky exercised complete control over Strathcona, not simply because he was the sole shareholder, but because he was the sole officer and director, and the sole signing officer. Only he could sign the cheques paying the sub-trades. He prepared or directed the preparation of Strathcona’s invoices. He was responsible for the “office side” of Strathcona’s projects. He exercised complete control and dominion over Strathcona.
[56] The second element of the test is also met. Mr. Koblinsky used Strathcona as an instrument of fraud. Mr. Koblinsky knew what the sub-trades had actually charged and been paid. He prepared or directed the preparation of Strathcona’s invoices to Mr. MacNamara. He knew Strathcona’s invoices inflated the sub-trades’ accounts and that they double-charged Mr. MacNamara for HST on the sub-trades’ invoices. Mr. Koblinsky exercised his control to allow Strathcona to be used for a fraudulent or improper purpose: see Terra Farm at para. 34.
[57] Accordingly, I find that this is an appropriate case in which to pierce the corporate veil. Mr. Koblinsky is personally liable to Mr. MacNamara for his loss.
Is there a genuine issue for trial with respect to Strathcona’s counterclaim?
[58] Strathcona claims that it is owed some amounts in respect of its invoice 498. This is the last invoice it issued to Mr. MacNamara, shortly before it was replaced by Bachly. Some of the amounts listed on the invoice as owing to sub-trades were paid directly by Bachly.[^3]
[59] Although the pleadings disclose that Strathcona’s counterclaim is for $124,009.58 plus HST, Mr. Koblinsky has identified, at Tab G to his affidavit dated September 26, 2016, the items on the invoice for which it claims payment. Those amounts add up to $95,062.76 plus HST.
[60] Mr. MacNamara challenges the invoice. He argues that the back-up documentation does not substantiate the items on the invoice.
[61] There are problems with the back-up documentation to invoice 498. For example, some charges are supported only by handwritten or typed “expense reports” of Mr. Koblinsky or one of Strathcona’s labourers. There are no receipts to accompany the expense reports.
[62] Another example is a charge for Engineered Assemblies dated May 23, 2013 in the amount of $1,218.75 (presumably including HST and mark-up). Strathcona endeavours to support this charge by relying an invoice from Engineered Assemblies dated April 29, 2013 in the amount of $5,176.50 (before HST). I find this invoice is not related to the charge, which is therefore unsupported by the documentation.
[63] Mr. MacNamara also argues that there is no evidence that Strathcona paid the amounts it claims[^4].
[64] Mr. Koblinsky deposes Strathcona is owed the amounts it claims but he does not depose that Strathcona paid them. At least one invoice is stamped “past due”. There is very little documentary evidence that the amounts were paid, with a few exceptions.
[65] There is a deposit invoice from Nitro Industrial Sales dated May 6, 2013 in the amount of $197.28 that is stamped “Paid”. It shows no HST was charged. There is also an invoice from Discount Car & Truck Rentals with a copy of a receipt in the amount of $99.59. The Discount invoice is difficult to read, but it appears to be dated April 24, 2013 and include HST of $11.46. Although neither of these documents have anything on them to link them to Mr. MacNamara’s renovation, Mr. Koblinsky deposes that Strathcona is owed these amounts. I accept that these are amounts owing under Strathcona’s invoice.
[66] There are also two rental invoices from Storstac relating to the rental of containers, dated May 7 and 8, 2013. These are both marked “paid”. However, only the May 8, 2013 invoice shows that the container was shipped to Mr. MacNamara’s property. The other container was shipped to an address in Toronto. Thus, I conclude that Strathcona’s documentation establishes it paid Storstac $223.74 on its May 8, 2013 invoice for a rental container in respect of Mr. MacNamara’s renovation. Of this amount, $25.74 is HST. The evidence does not demonstrate that the May 7, 2013 invoice is related to Mr. MacNamara’s project.
[67] The back-up documentation also includes three documents entitled “Transaction Detail by Account” that list certain items and amounts. Mr. Koblinsky’s affidavits do not explain what these are. They were not addressed in oral or written argument, although Mr. MacNamara’s counsel addressed the question of whether Strathcona paid the amounts it claimed during her argument. Mr. Koblinsky did not give me any evidence to allow me to determine whether these documents could establish that Strathcona actually paid other charges which it claims it is owed. These documents reference figures totalling about $89,000, but I have no evidentiary framework within which to evaluate them.
[68] It is well-established that a responding party to a summary judgment motion may not rest on the allegations or denials in its pleadings. Rule 20.02(2) of the Rules of Civil Procedure requires a responding party to “set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.” A court is entitled to assume that the record contains all the evidence the parties would present if the matter proceeded to trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at paras. 26-27; aff’d 2014 ONCA 878 (Ont. C.A.).
[69] The Strathcona defendants argue this was the all documentation they could find, and that they were busy with other things. I do not accept this submission as a basis to excuse documentary or evidentiary gaps. First, the Affidavits of Documents of Mr. Koblinsky and Strathcona do not list any documents in Schedule C, that is, relevant documents no longer in their possession or control. Second, the invoice for which Strathcona seeks payment was sent in June 2013,[^5] immediately before Strathcona was terminated and Bachly was hired. There would thus have been every reason for Strathcona and Mr. Koblinsky to secure the documents that would establish Strathcona’s entitlement to payment at that time. Third, Strathcona has had years to look for these documents.
[70] The evidence led by Strathcona does not establish that there is a genuine issue for trial with respect to the counterclaim. It has not established entitlement for any amounts owing under the counterclaim except as I have identified them above. I calculate that Strathcona is owed $483.41 plus its 25% mark-up, for a total of $604.26. Mr. MacNamara must also pay the HST on the Discount invoice, the Storstac invoice and on Strathcona’s 25% mark-up. I calculate that amount at $52.91. Thus, Mr. MacNamara owes Strathcona a total of $657.17.
[71] I dismiss the balance of the counterclaim.
Conclusion
[72] I allow Mr. MacNamara’s motion for summary judgment in the amount of $1,387,902. I allow Strathcona’s counterclaim in the amount of $657.15, and dismiss the balance of the counterclaim.
Costs
[73] The parties agreed on costs of this motion in the amount of $50,000 all inclusive. Mr. MacNamara was almost wholly successful on the motion, with the exception of the $657.15 I have concluded is owing on the counterclaim. Given the result of this motion, the Strathcona defendants owe Mr. MacNamara $50,000 in costs, inclusive of disbursements and HST.
[74] Costs of the action remain outstanding. If the parties cannot agree on costs, Mr. MacNamara shall deliver written costs submissions not exceeding six pages in length, together with a bill of costs and any other relevant attachments to me within two weeks. The Strathcona defendants shall deliver any written response, not to exceed six pages in length plus any relevant attachments, within one week from receipt of Mr. MacNamara’s submissions. Mr. MacNamara may deliver reply costs submissions within three business days of receipt of the Strathcona defendants’ submissions.
Madam Justice J. T. Akbarali
Released: February 10, 2017
CITATION: MacNamara v. 2087850 Ontario Ltd, (Strathcona Construction) 2017 ONSC 499
COURT FILE NO.: CV-14-516367
DATE: 20170210
BETWEEN:
Tyler MacNamara
Plaintiff
– and –
2087850 Ontario Ltd., o/a Strathcona Construction, Robert Koblinsky and Richard Morris
Defendants
Crawford Smith and Amanda Shelley, for the Plaintiff
REASONS FOR JUDGMENT
Akbarali, J.
Released: February 10, 2017.
[^1]: It did not trouble the Strathcona defendants that it would be difficult to recover, on a quantum meruit basis, for work that had not been done - one of the central allegations levied against them in this action. [^2]: Mr. Finnegan produced an initial report, and then revised it taking into consideration some additional documentation attached to Mr. Koblinsky’s affidavits in his responding motion record that Strathcona had not produced before. I thus rely on Mr. Finnegan’s revised report. [^3]: The Strathcona defendants made no claim for a 25% mark-up in respect of work done before Bachly took over the project but which was paid by Bachly. [^4]: The Strathcona defendants did not argue that, whether or not the amounts were paid, they were entitled to a mark-up on the sub-trades’ invoices. [^5]: It bears the date June 11, 2012, but the parties agreed 2012 was a typographical error; the date should have been June 11, 2013.