COURT FILE NO.: CV-19-628829

DATE: 2023 01 17

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Act, RSO 1990, c. C.30, as amended

BETWEEN:

BELLSAM CONTRACTING LIMITED

A. Flesias and R. Hammond, for the plaintiff / defendant by counterclaim

Plaintiff / Defendant by counterclaim

• and -

2567714 ONTARIO INC., CORY TORGERSON, NADINE TORGERSON and CAISSE POPULAIRE VOYAGEURS INC.

J. Rankin and C. Campbell, for the defendants / plaintiff by counterclaim, 2567714 Ontario Inc., Cory Torgerson, and Nadine Torgerson

Defendants / Plaintiff by counterclaim

HEARD: April 19-22, May 9 and 11, 2022

REASONS FOR DECISION (Trial of an Issue)

Associate Justice Todd Robinson

I. OVERVIEW...................................................................................................................... 2

II. ISSUES............................................................................................................................... 3

III. FACTUAL BACKGROUND........................................................................................... 3

IV. Analysis......................................................................................................................... 6

a. Relevant legal framework............................................................................................ 6

b. Was a contract formed in December 2018?................................................................. 8

i. Was Bellsam’s December 2018 quote an offer capable of being accepted?........ 8

ii. Was the offer accepted?...................................................................................... 11

iii. Was Frank acting as an agent of Bellsam?........................................................ 11

iv. Was there agreement on all essential contract terms?....................................... 16

v. Was there legally sufficient consideration?........................................................ 18

vi. Who are the parties to the contract?................................................................... 19

c. Did Bellsam’s revised quotation in January 2019 form or amend the contract?...... 22

V. Conclusion................................................................................................................ 25

VI. Costs & REPORT........................................................................................................ 26

I. OVERVIEW

1This action involves a dispute arising from the build-out by Bellsam Contracting Limited (“Bellsam”) of a 12,000 sq. ft. high-end cosmetic surgery clinic run by Dr. Cory Torgerson and Nadine Torgerson, who are spouses. Dr. Cory Torgerson is a surgeon specializing in head, neck and facial surgery. Nadine Torgerson manages Dr. Torgerson’s medical practice through a management corporation.

2In 2008, long before the subject project, the Torgersons undertook a 3,000 sq. ft. construction and renovation project of their medical clinic and surgery centre in Yorkville. The work was formally undertaken by Dr. Torgerson’s corporation, Torgerson Medical Professional Corporation. Bellsam was contracted to perform the work. As a result of that project, the Torgersons met and subsequently formed a friendship with Frank Bellantonio, who is the son of Bellsam’s principal, Salvatore Bellantonio (known as Sam Bellantonio).

3Bellsam is a family-owned and operated general contractor business with a stated specialty in constructing dental and medical offices. Its principal, Sam Bellantonio, is also the patriarch of the family, now in his 80s. Trial evidence supports that Carmine Turco, who I understand is Sam Bellantonio’s brother-in-law, also had a significant role in the business at the time of the subject project. Theresa Zumpano, who was Bellsam’s sole trial witness, is Sam Bellantonio’s daughter. At the time of the project, she was Bellsam’s officer manager.

4Dr. Torgerson and Ms. Torgerson incorporated 2567714 Ontario Inc. to purchase a new property to expand their business operations. A 12,000 sq. ft. floor was purchased in a midrise building in Toronto. The Torgersons’ plan was to build out the space into a new high-end medical clinic and surgery centre. Dr. Torgerson’s business operations would then move to the new location from the leased space in Yorkville.

5In 2018, Nadine Torgerson approached Frank Bellantonio about the build-out. Bellsam provided several budget estimates and quotes for the job as was ultimately contracted to perform the build-out.

6The parties have a materially different view on Bellsam’s contractual scope of work and the contract price. Both sides agree that a contract was formed from Bellsam’s quotes. However, they disagree on which quote governs: a quote provided in December 2018 or a quote provided in January 2019. This trial of an issue was convened to determine what constitutes the contract between the parties or if there was no consensus ad idem at all.

7I find that a contract was formed in December 2018. Bellsam’s December quote constituted an offer by Bellsam for its supply of services and materials. It was accepted by Nadine Torgerson. That acceptance was communicated by Ms. Torgerson to Frank Bellantonio, who I find was an agent for Bellsam at the material times. The parties had agreed on all material terms, namely price, scope, and completion date, and the agreement was supported by legally sufficient consideration. I further find that the contract was between only Bellsam and 2567704 Ontario Inc. Neither Dr. Torgerson nor Ms. Torgerson are parties to the contract in their personal capacities.

8I further find that Bellsam’s quote in January 2019 was not accepted by any of Dr. Cory Torgerson, Nadine Torgerson, or 2567714 Ontario Inc. (together, the “Torgerson Defendants”) and did not have the effect of amending the existing agreement that I have found. Accordingly, I find that Bellsam’s base contract price and scope of contract work is that provided in Bellsam’s December 2018 quote.

II. ISSUES

9The sole issue to be decided is what constitutes the contract between the parties, namely which quote governed the contractual relationship (if either of them) and who are the parties to the contract. Deciding those issues has been far from straightforward on the particular facts of this case and given the significance of particular witnesses not being called at this trial and adverse inferences that both sides have asked that I draw.

III. FACTUAL BACKGROUND

10There are a number of undisputed or uncontested facts from witness evidence. A brief summary of the facts leading up to and following Bellsam’s two disputed quotes, as drawn from the evidence at trial, will help better frame my analysis.

11To avoid confusion in these reasons, since both Sam Bellantonio and Frank Bellantonio have the same surname, I will at times refer to Frank by only his first name. However, I do so solely for clarity on who I am referencing, since “Mr. Bellantonio” equally refers to both of them. No discourtesy is intended by using less formality.

12In March 2018, Nadine Torgerson contacted Frank Bellantonio about the build-out of the new clinic. There is no dispute that Bellsam became involved as a result of this communication. Ms. Torgerson also contacted Studio CK, an interior design consultant, about being involved to prepare design drawings. Studio CK had also been involved in the prior Yorkville project. Ms. Torgerson, Frank Bellantonio, and one of Studio CK’s co-owners, Chris Koroknay, did a site walk-through and discussed preliminary plans for the project.

13In April 2018, Ms. Torgerson asked Frank Bellantonio for a general estimate from Bellsam to support looking at necessary construction financing. In response, Bellsam provided an original estimate of $1.95 million to complete the build-out as a “preliminary price”. The estimate expressly excluded engineered, architect, and designer drawings. There is no evidence on how the preliminary pricing was done, or that anyone from Bellsam attended the site after the site walk-through involving Frank (whose role on behalf of Bellsam is disputed). Neither side takes the position that this initial pricing was anything more than a preliminary estimate.

14Between April and July 2018, Studio CK prepared a design proposal for the project. Various meetings took place between Bellsam and the Torgersons, which were attended by Frank Bellantonio. Studio CK’s design proposal was reviewed and discussed at those meetings.

15In addition to Bellsam, a second contractor, Cresford Developments (“Cresford”), was also quoting the project. Cresford was already constructing the building in which the new premises were located. Cresford representatives also attended certain meetings concurrently with Bellsam representatives, in addition to having separate meetings with Nadine Torgerson.

16In July 2018, Nadine Torgerson engaged Northstar Engineering & Technologies Ltd. (“Northstar”) to prepare mechanical and electrical drawings for the build-out. Northstar also later acted as a consultant during construction. David Long, the principal of Northstar, had been involved in the prior Yorkville project in 2008. For that project, Northstar had been hired directly by Bellsam to provide engineering and design services.

17In August 2018, Nadine Torgerson asked for pricing from both Cresford and Bellsam based on the drawings that had already been prepared so that the Torgersons could decide on which contractor to engage. Cresford provided a budget price of $2,751,123. Bellsam’s budget price was $2,293,658, which was sent by Carmine Turco to Chris Koroknay of Studio CK, copied to Frank Bellantonio. Bellsam’s position is that only Cresford’s estimate was used to prepare Bellsam’s estimate, and that it was not based on any drawings. Mr. Koroknay forwarded Bellsam’s budget price to Nadine Torgerson.

18After receiving both budgets, Nadine Torgerson told Chris Koroknay that the target budget for the project would be $2.4 million. Mr. Koroknay prepared a rough side-by-side comparison between Cresford’s budget and Bellsam’s budget. That comparison was then emailed by Mr. Koroknay to Carmine Turco, Sam Bellantonio, and Frank Bellantonio. His email specifically noted “the $2.4 million budget Nadine is looking for”.

19A further meeting with Bellsam occurred the next day, attended by Nadine Torgerson, Sam Bellantonio, Carmine Turco, Daisy Chan of Studio CK, and Frank Bellantonio. Ms. Torgerson’s evidence, corroborated by Ms. Chan, is that she informed those present that the maximum budget for the project was $2.4 million. She further gave evidence, corroborated by Chris Koroknay, that Bellsam’s quote was discussed, as well as ways that Bellsam could value engineer the project to stay within the budget. Ms. Torgerson’s evidence is also that Frank Bellantonio provided assurances at the meeting that Bellsam wanted the job and would work within the budget.

20Nadine Torgerson’s evidence is that, following that meeting, she met with Cresford to see if they could reduce their price to come within the $2.4 million budget. They could or would not and withdrew interest in the project. Ms. Torgerson then proceeded to secure a construction financing commitment from Desjardins for $2.5 million, which Desjardin made subject to receiving a signed construction contract.

21Through September and October 2018, various meetings took place about getting the project started. Evidence from Nadine Torgerson, Chris Koroknay, and David Long is consistent that Ms. Torgerson expressed at meetings attended by Sam Bellantonio, Carmine Turco, and Frank Bellatonio that the build-out had to be completed by May 31, 2019. The lease at the Yorkville property terminated on December 31, 2018, and the landlord had only provided an extension to May 31, 2019. Bellsam does not dispute knowing that deadline.

22In late October 2018, Cresford advised Ms. Torgerson by email (copied to Frank Bellantonio) that the building inspector had confirmed construction work could commence, on certain terms, even though occupancy had not yet been achieved. The email from Cresford’s representative specifically referred to Frank as “Frank from Bellsam Contracting”.

23In the following period, various drawings from Studio CK were provided to Bellsam. By late November, Frank Bellantonio was requesting final mechanical and electrical drawings from Northstar so that Bellsam could finish its pricing. Northstar emailed Frank its “Issued for Final Pricing” drawings in early December 2018.

24On December 7, 2018, a meeting occurred on site to discuss the drawings and answer questions. The meeting was attended by Nadine Torgerson, Chris Koroknay, Daisy Chan, David Long, Frank Bellantonio, Carmine Turco, representatives of certain of Bellsam’s subcontractors, and the project architect (who had no role in this trial). A few days later, Ms. Torgerson met with Frank Bellantonio and Chris Koroknay on site to do a further walk-through and discuss the project.

25On December 17, 2018, after several follow-ups from Nadine Torgerson to Frank Bellantonio, Bellsam emailed a one-page document, signed by Sam Bellantonio, providing a “budget price” of $2,300,000, plus HST. It referred to drawings prepared by Studio CK and Northstar and included four payment milestones. Nadine Torgerson sent a text message to Frank saying that it “looks good to me” and forwarded the estimate to Desjardins.

26On January 15, 2019, Bellsam emailed a four-page document providing a “preliminary price” of $2,699,340, plus HST, with reference to “Electrical, Plumbing, HVAC, Mechanical, Floors, Cabinets, Paint, Carpentry, Walls/Ceiling & Demo”. It similarly included four payment milestones, as well as additional pages identifying the trades proposed to perform the work, exclusions from work, a work commencement date, and project duration of 18-20 weeks with approximate timing for certain work. The document was not signed by any one on behalf of Bellsam.

27Nadine Torgerson’s evidence is that, after receiving the January 2019 quote, she contacted Frank Bellantonio about concerns with the quote, notably the $400,000 increase in price, and had further discussions with him about those concerns. Other than speaking to Frank, who indicated he would speak to Sam Bellantonio, there is no evidence that Ms. Torgerson spoke with anyone at Bellsam until March 2019.

28Bellsam continued work on the project and Bellsam began invoicing for its work. The project timeline included in Ms. Zumpano’s affidavit indicates that the top track layout for HVAC and mechanical work had commenced by mid-January, following which HVAC, mechanical, and electrical ceiling work proceeded. Work on partition metal studs appears to have been ongoing concurrently. Bellsam also began requesting authorizations for extra work.

29On March 21, 2019, a meeting occurred at Bellsam’s offices, which was attended by Nadine Torgerson, Sam Bellantonio, Carmine Turco, and Frank Bellantonio. Both Chris Koroknay and Daisy Chan of Studio CK were also in attendance. The purpose of that meeting and what occurred is disputed, but it is undisputed that it ended with Nadine Torgerson walking out. Bellsam’s position is that its scope of work and extras were reviewed in detail. The Torgerson Defendants’ position is that Bellsam refused to deal with Ms. Torgerson’s concerns about Bellsam’s increased price and used the meeting for its own agenda, namely seeking approval of extras.

30Work continued after that meeting, with Bellsam issuing invoices based on its revised pricing. There is no dispute that Bellsam’s invoices were submitted to Desjardin for construction draws and that Bellsam was paid from those draws. By July 2019, Bellsam had been paid in excess of $2.4 million for its work. The project had not yet been completed. Bellsam ceased work in August 2019.

IV. Analysis

31It is undisputed that s. 87.3 of the Construction Act, RSO 1990, c C.30 as it read on June 29, 2018 (i.e., the former Construction Lien Act) (the “CLA”) continues to apply to Bellsam’s lien and this lien action.

32As already noted, the parties agree that one of two quotes by Bellsam governs their contractual relationship. They disagree on which one. Bellsam’s position is that its January 2019 quote was accepted and formed the contract. The Torgerson Defendants’ position is that the December 2018 quote was an offer that was accepted and thereby formed the contract. They take the position that the revised January 2019 quote was uncertain and never accepted. Bellsam argues that its December 2018 quote was nothing more than a preliminary budget proposal.

33I am addressing the two quotes in chronological order. I deal first with whether a contract was formed in December 2018 (which I find that it was) and, second, if a contract was formed in December 2018, whether the January 2019 quote amended it (which I find that it did not).

a. Relevant legal framework

34Deciding whether either of Bellsam’s two quotes led to a contract being formed engages basic principles of contract law.

35An enforceable agreement has five elements: offer, acceptance, consideration, certainty of essential terms, and an intention to create a legal relationship. As set out by the Supreme Court of Canada, a contract is formed where there is an offer by one party accepted by the other with the intention of creating a legal relationship, which is supported by consideration: Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga, 2021 SCC 22 at para. 35.

36Determining whether a contract is formed is assessed on an objective standard. The court examines how each party’s conduct would appear to a reasonable person in the position of the other party: Ethiopian Orthodox, supra, at para. 35. In deciding whether or not a contractual relationship existed, the court must examine the factual matrix between the parties: Bowman v. Ontario, 2021 ONCA 795 at para. 10.

37Specifically, assessing whether the parties intended to create legal relations does not turn on their subjective views or understanding. It does not matter that one party may have had no intention to enter a legally-binding contract. Rather, what matters is whether their conduct was such that a reasonable person would conclude that they intended to be bound. That includes considering the nature of the relationship among the parties and the interests at stake: Ethiopian Orthodox, supra at paras. 37-38.

38In this case, it is also not enough for there to have been an offer to perform construction work that was, in general terms, accepted. For there to be a binding contract, there must also be a meeting of the minds or consensus ad idem on all essential terms of what that relationship will be: M.S. v. I.S., 2021 ONSC 3715 at para. 85. The essential terms of a construction contract are generally viewed as price, scope of work, and a schedule or completion date: The Gatti Group Corp. v. Zuccarini, 2020 ONSC 2830 at para. 71.

39Both sides have cited additional case law on contractual interpretation, including from the Supreme Court of Canada and the Ontario Court of Appeal. They made submissions on how I should be applying that law to my assessment on whether a contract was formed. The cited case law clearly applies in interpreting the words of a contract that parties have already entered into, but it is not clear to me that it equally applies in deciding whether or not a contract was formed in the first place. For example, there are certain restrictions on considering the conduct of parties when interpreting a contract that I am not convinced apply in deciding whether a contract was formed.

40However, I do find the Supreme Court of Canada’s decision in Sattva Capital Corp. v. Creston Moly Corp. to be instructive on the scope of the factual matrix to be considered. Sattva is a leading decision on contractual interpretation. In it, the Supreme Court of Canada discusses the kind of surrounding circumstances that may properly be considered by a court when interpreting a contract, namely objective evidence of the background facts known to the parties or that reasonably ought to have been within their knowledge at or before the date of contract formation: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53at para. 58. In my view, that same factual matrix is appropriately considered when undertaking the objective assessment of whether a contract has been formed. It is precisely those kinds of surrounding circumstances that properly inform what it would appear was intended to a reasonable person in the position of the parties.

b. Was a contract formed in December 2018?

41In assessing whether Bellsam’s quote dated December 16, 2018 formed the contract, I deal in turn with each of the elements of offer, acceptance, communication of acceptance, agreement on material terms, sufficiency of consideration, and parties to the contract.

i. Was Bellsam’s December 2018 quote an offer capable of being accepted?

42Bellsam’s one-page “budget estimate” dated December 16, 2018 is brief. It was issued to “Togerson [sic] Medicine Professional Corporation” and addressed to “Dr. C. Torgerson”. There is no dispute that Sam Bellantonio signed the quote, after which Theresa Zumpano emailed it to Frank Bellantonio. Frank then emailed it to Nadine Torgerson. The December 2018 quote states as follows:

This is to confirm our budget price of $2,300,000.00 (Two million, three hundred thousand dollars – plus HST) for the breakdown list below

Included In Our Quote: -As per all drawings submitted by Studio CK & NorthStar Engineering

Our Terms: -30% deposit

-20% upon rough in

-40% upon rough in completion

-10% upon completion

Should you have any questions, please call our office at your earliest convenience. We look forward to hearing from you.

43I have no hesitation in finding that this quote objectively constituted an offer based on what the parties knew at the time and considering the context in which it was provided.

44At the time it was sent, Nadine Torgerson had already relayed the need to get the project going and completed by May 31, 2019. Her undisputed evidence supports that Carmine Turco had confirmed that Bellsam would require 16-20 weeks to complete the work, which would meet that deadline. There had been numerous meetings and site attendances to discuss the project and required work. Bellsam had been provided with Studio CK’s design drawings and Norhtstar’s mechanical and electrical drawings (the latter being specifically issued for pricing). Ms. Torgerson had also been requesting pricing from Bellsam for some time. The price was within the budget price of $2.4 million that had been relayed to Bellsam’s representatives in August 2018. The quote also referred specifically to the Studio CK and Northstar drawings that had been provided to Bellsam.

45Moreover, Bellsam’s own evidence supports that it had already commenced work earlier the same month. According to the project timeline tendered by Theresa Zumpano, Bellsam started partition layout on December 7, 2018 and bulkhead construction on December 10, 2018. Photographs stated to have been taken on December 13, 2018 were made an exhibit to Ms. Zumpano’s affidavit showing that work. The fact that Bellsam had already commenced work makes Ms. Torgerson’s view of the December 2018 as Bellsam’s proposed price and scope for the job all the more objectively reasonable.

46Although the parties disagree on the subjective intent behind the December 2018 quote, the test is objective. All of the objective facts support a finding that Bellsam was offering to perform the work identified in the Studio CK and Northstar drawings, which were available to it at the time, for $2.3 million, plus HST.

47Theresa Zumpano’s evidence is that the December 2018 quote does not reflect pricing based on the drawings, despite the plain language of “included in our quote”. She says it was prepared solely for Nadine Torgerson’s banking purposes at Frank Bellantonio’s request. Ms. Torgerson denied that assertion. Ms. Zumpano’s evidence is that she prepared the quote herself and, after a further request from Frank, had Sam Bellantonio sign it before sending it.

48Two witnesses with knowledge on the December 2018 quote were not called at this trial: Sam Bellantonio and Carmine Turco. The Torgerson Defendants ask that I draw an adverse inference from Bellsam’s failure to call them as witnesses. I find it appropriate to do so.

49Where a party fails to call a material witness, the court may draw an adverse inference that failing to call the witness is an implied admission that their evidence would be contrary to the party’s case, or at least would not support it. Drawing an adverse inference is discretionary. In exercising that discretion, I am to consider factors such as (i) whether the absent witness has material evidence to give at trial; (ii) whether the absent witness is best placed to provide, or the only person who can provide, the evidence; (iii) whether the absent witness is available to both parties equally; and (iv) whether there is a legitimate explanation for the decision to not call the absent witness: Canadian National Railway Company v. Holmes, 2022 ONSC 1682 at paras. 215 and 218.

50On the first factor, there is no question that both Sam Bellantonio and Carmine Turco had relevant and material evidence to give at this trial. Ms. Zumpano’s own evidence supports that both of them had direct involvement in deciding the scope of work that Bellsam would undertake, the pricing for that work, and how the project was run.

51On the second factor, I find that Theresa Zumpano’s evidence on Bellsam’s understanding and intentions at the time of issuing the December 2018 quote has limited reliability. Ms. Zumpano admitted during cross-examination that she had no decision-making authority, did not attend the meetings prior to the December 2018 quote, was not involved in negotiating Bellsam’s scope of work, had no involvement in pricing the job, and had no involvement in on-site work.

52Conversely, Sam Bellantonio and Carmine Turco were in the best position to give evidence on Bellsam’s intentions in December 2018. According to Theresa Zumpano’s testimony, they were the only two individuals involved in the project with decision-making authority for Bellsam. Sam Bellantonio signed the December 2018 quote and attended prior project-related meetings with either or both of Carmine Turco and Frank Bellantonio. Carmine Turco was involved in preparing Bellsam’s prior August 2018 budget price, was also personally involved in prior project-related meetings, and had a direct role in coordinating site work.

53At least Sam Bellantonio, but likely also Carmine Turco, could have directly contradicted Nadine Torgerson’s evidence and provided further evidence on the context in which the December 2018 was prepared and signed. Both have material evidence on what was discussed internally about the December 2018 quote. Sam Bellantonio would also have been able to testify to Bellsam’s intentions when he signed it.

54On the third factor, Sam Bellantonio and Carmine Turco were not witnesses who were equally available to both sides. They would have been adverse witnesses to the Torgerson Defendants. Notably, rule 53.07 of the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”) expressly identifies “an officer, director, employee or sole proprietor of an adverse party” as a deemed adverse witness. Neither are witnesses who the Torgerson Defendants ought reasonably to have called themselves.

55On the fourth factor, Bellsam has provided no cogent explanation for its decision to not call either Sam Bellantonio or Carmine Turco. As already noted, they were the individuals with decision-making authority for Bellsam on this project. Theresa Zumpano was not. They represented Bellsam at the key meetings where scope of work, pricing, and scheduling matters were negotiated and discussed prior to the December 2018 quote being issued. Theresa Zumpano did not. They are the two Bellsam representatives who would have direct evidence on the scope of work that Bellsam was prepared to perform and the price that it was prepared to accept. Theresa Zumpano did not.

56No adequate explanation has been given for failing to call either of them. In my view, they are both evidently within the exclusive control of Bellsam. Without them, there is no evidence from anyone with authority at Bellsam on whether the quote was viewed as being just a budget proposal solely for banking purposes (as Ms. Zumpano asserts) or whether it was intended to be Bellsam’s offered price for the job.

57For these reasons, I draw an adverse inference from Bellsam’s decision not to call Sam Bellantonio and Carmine Turco that their evidence would not have supported Bellsam’s position on its intention behind the December 2018 quote.

58With respect to Theresa Zumpano’s own evidence, significant portions were based on hearsay from Sam Bellantonio, Carmine Turco, and others. At the outset of trial, a number of paragraphs and exhibits in Ms. Zumpano’s affidavit were struck following objections by the Torgerson Defendants to admissibility of hearsay statements and documents that Ms. Zumpano could not authenticate. During cross-examination, Ms. Zumpano was demonstrated to lack personal knowledge of statements made in her affidavit evidence, which she confirmed were assumed or were told to her by others. As a result, I have generally preferred the evidence of Ms. Torgerson to that of Ms. Zumpano. Ms. Torgerson was present at the key meetings and involved in all material negotiations and discussions. Ms. Zumpano was not.

59The totality of the objective evidence and Nadine Torgerson’s subjective understanding supports the Torgerson Defendants’ position. Ms. Zumpano’s evidence is insufficient to find otherwise. I find that Bellsam’s December 2018 quote was an offer to complete the scope of work identified in the drawings of Studio CK and Northstar for a total contract price of $2.3 million, plus HST.

ii. Was the offer accepted?

60The only communicated acceptance argued by the Torgerson Defendants was done by Nadine Torgerson through Frank Bellantonio. I was pointed specifically to a text from Ms. Torgerson in which she told Frank that Bellsam’s quote “looks good to me”. I accept her evidence that this was intended to confirm her agreement to the quote. I also find that the text message is a valid manner of accepting. However, there is no evidence that either Ms. Torgerson or Frank Bellantonio relayed an acceptance to Sam Bellantonio, Carmine Turco, or any other undisputed representative of Bellsam. It follows that validity of the acceptance turns on whether Frank Bellantonio had authority to act on behalf of Bellsam.

61It is undisputed that Frank Bellantonio had an ongoing role throughout the project. Their dispute is over who Frank was representing. The Torgerson Defendants argue that Frank was acting on behalf of Bellsam. Bellsam argues that Frank was neither an employee nor agent of Bellsam, and was involved solely as the Torgersons’ friend.

62Theresa Zumpano’s evidence supports and I find that Frank was not an employee of Bellsam at the material times. Accordingly, the parties’ dispute turns entirely on agency principles. If Frank was acting as an agent for Bellsam, then acceptance could be and was communicated through him. If not, then acceptance of Bellsam’s offer may not have been validly communicated.

iii. Was Frank acting as an agent of Bellsam?

63The onus of proving agency lies with the party dealing with the agent. That party must prove either actual or apparent authority: Bougadis, Chang LLP v. Papastamoulis, 2018 ONSC 1796at para. 33. Accordingly, the Torgerson Defendants bear the burden of establishing that Frank Bellantonio was an agent of Bellsam.

64Actual authority arises from an express or implied agreement between the agent and principal. It is demonstrated through a “manifestation of consent” by the principal to the agent that the agent may act for or represent the principal: Graham v. Benton, 2020 ONSC 6985 at para. 125.

65Apparent authority, which is also referred to as ostensible authority, is concerned with the appearance of authority to third parties. It requires the principal to make some representation, including through omission, that a reasonable person could rely upon in concluding that the agent has authority to act. A representation by the alleged agent alone is insufficient. If it appears to a reasonable third party that a relationship of agency exists, then the principal may then be bound by the agent’s actions, even though the agent has no actual authority to act: Graham v. Benton, supra at paras. 125-126; Bougadis, Chang LLP, supra at para. 33.

66Also relevant is the statutory “indoor management rule” codified in s. 19 of the Business Corporations Act, RSO 1990, c B.16 (the “OBCA”). The rule operates such that if an individual is represented as a corporation’s officer or agent, then the corporation cannot later rely on the individual’s lack of actual authority to enter into a particular transaction as a means to avoid an obligation. The rule protects innocent parties from having to worry about a corporation’s internal housekeeping when entering into an agreement: Campbell Pools Inc. v. Seville Group Inc., 2015 ONSC 2314 at paras. 75-76; 1954294 Ontario Ltd. v. Gracegreen Real Estate Development Ltd., 2017 ONSC 6369 at paras. 107-108

67Bellsam points to the decision of my predecessor, Master Albert, as setting out the requisite elements of ostensible authority for a corporate principal, which Bellsam submits have not been established here. In particular, Bellsam argues that the Torgerson Defendants must establish (i) a representation was made that the agent had authority on behalf of the principal to enter into the contract; (ii) the representation was made by a person who had actual authority to manage the principal’s business in general or in relation to the subject of the contract; (iii) the representation induced the contracting party to enter into the contract; and (iv) the principal’s articles of incorporation do not preclude the contract or delegation of authority to contract to an agent: Dean’s Standard Inc. v Siljub Toronto Ltd., 2016 ONSC 5254 at paras. 24-25, citing Doiron v. Devon Capital Corp., 2003 ABCA 336 at para. 13.

68I am not convinced that the four-part “test” relied on by Bellsam accurately reflects the state of the law for establishing ostensible authority in Ontario. If nothing else, the last requirement is at odds with the indoor management rule codified in s. 19 of the OBCA. Moreover, in my view, the “test” is at odds with the rest of the Ontario case law submitted at this trial on ostensible authority.

69On close review of Master Albert’s decision, I do not think that she was endorsing it as the correct “test”. It is expressly noted to be the requirements “according to the Alberta Court of Appeal”. Nothing in the decision says or supports that Master Albert was confirming it as an applicable test in Ontario. In my view, read in context of the entire decision, Master Albert was discussing the case because it was the authority relied upon by the plaintiff as supporting its argument for agency. In that case, the plaintiff had the evidentiary onus of establishing agency and Master Albert did not accept that the onus had been met. The plaintiff’s agency argument was being dismissed in the framework of the legal arguments advanced by the plaintiff.

70Turning to whether Frank Bellantonio was an agent with actual or ostensible authority, noticeably absent from trial was the testimony of Frank himself. He was not called by either side despite his consistent presence and involvement from the early planning stages of the project to the end of Bellsam’s work, and even into the early days of litigation. Frank appears to have participated in every meeting of significance during contract negotiations, had a regular on-site presence, and Nadine Torgerson’s direct evidence is that she and Frank had ongoing discussions about Bellsam’s price and scope of work.

71Theresa Zumpano testified that the defendants are trying to “throw Frank under the bus”. However, I cannot determine if that is the case without Frank’s own testimony, or that of Sam Bellantonio or Carmine Turco, both of whom were also present at key meetings with Nadine Torgerson and Frank.

72Frank Bellantonio’s evidence on why he was involved in the project when he was not Bellsam’s employee would almost certainly have shed some light on the agency dispute. Both sides argue that an adverse inference should be drawn against the other as a result. In my view, though, an adverse inference is not appropriate against either side.

73I have already discussed the requirements for drawing an adverse inference. With respect to an adverse inference against the Torgerson Defendants, I am not satisfied that the evidence of the Torgersons’ friendship with Frank Bellantonio is sufficient to find that he is within their control or is more likely willing to help them. In my view, the evidence (discussed further below) supports the contrary. Frank is also not the only witness in a position to provide evidence relevant to deciding apparent agency. Nadine Torgerson’s evidence is equally material.

74With respect to an adverse inference against Bellsam, the Torgerson Defendants have the evidentiary burden of proving agency and cannot shift that burden, or any portion of it, to Bellsam. There must be positive evidence supporting agency, not the absence of evidence to the contrary from the opposing party. Since I find that the Torgerson Defendants have met their evidentiary burden, and Bellsam has not tendered cogent evidence to dispute agency, I need not consider whether an adverse inference against Bellsam should be drawn.

75Frank Bellantonio clearly had a role on this project and was evidently coordinating with Bellsam. Evidence supports that, at times, he was directing work on the project site and appears to have been making decisions on behalf of Bellsam. In my view, the totality of the evidence supports that Frank was acting on behalf of Bellsam, not the Torgersons, during the project. The admitted personal relationship between Frank and the Torgersons does not change that. There are numerous examples from the evidence supporting my finding. I will review only a few to make the point.

76First, there is undisputed evidence from Nadine Torgerson, Dr. Cory Torgerson, and Chris Koroknay that Bellsam’s contract negotiations and work for the 2008 project in Yorkville was led by Frank. Evidence from David Long supports that his company, Northstar, was contracted by Bellsam on that project to provide engineering and design services and that the person he dealt with on behalf of Bellsam was Frank. Northstar’s quote and all of its invoices were addressed to Bellsam at Frank Bellantonio’s attention.

77Second, Nadine Torgerson’s evidence is that Bellsam performed a number of smaller jobs at the Yorkville property between 2010 and 2016. Her affidavit evidence is that she contacted Frank about those projects and that “he led the Bellsam team to complete them”. During cross-examination of both Nadine Torgerson and Dr. Cory Torgerson, Bellsam’s counsel asked questions suggesting that Frank had performed work for them through his own construction company, Totem Construction (on which Theresa Zumpano gave some evidence in her affidavit). Both Ms. Torgerson and Dr. Torgerson gave consistent evidence that the prior projects were with Bellsam. I note the following:

(a) Ms. Torgerson testified that she had heard of Totem Construction, but did not know if it was an actual company or not. She acknowledged that she had emailed Frank at a Gmail email address with “totem” in it, but went on to testify that Frank was “synonymous with Bellsam” and always managed their Bellsam projects.

(b) Dr. Torgerson denied having dealt with Frank through Totem Construction. He confirmed that they had always dealt with Bellsam on prior projects, stating unequivocally, “Bellsam was Frank and Frank was Bellsam”.

78Third, in April 2018, Nadine Torgerson asked Frank for a “general estimate/breakdown of the budget for renovations” for the project at issue in this action. Bellsam prepared that estimate and, once prepared, Theresa Zumpano forwarded it to Frank. Frank, in turn, forwarded the estimate to Nadine Torgerson. However, Bellsam tendered no evidence on how its budget was prepared if Frank was not involved. Ms. Torgerson’s undisputed evidence is that there were no drawings yet. There is no evidence that anyone from Bellsam attended the site prior to preparing the April 2018 estimate. Evidence supports that, other than the Torgersons, only Frank and Chris Koroknay had attended the site by that time. I thereby infer that Bellsam must have relied on information from Frank to prepare the estimate.

79Fourth, in addition to Frank clearly being the primary channel of communication between the Torgersons and Bellsam, Frank sent several written communications to Nadine Torgerson identifying himself as being aligned with Bellsam. For example:

(a) in response to Nadine Torgerson requesting the estimate in April 2018, he responded that “we” are on it;

(b) in a text message to Nadine Torgerson in August 2018 after a meeting at Bellsam’s offices, Frank stated, “I hope I don’t seem to pushy about us getting the job” (emphasis added);

(c) in late 2018, after Bellsam was provided with various drawings, Frank confirmed in an email, “they’ve send so much stuff this week. We got enough now to some solid numbers together. We work on it all day today and tomorrow” (emphasis added); and

(d) in December 2018, in response to an email from David Long to Carmine and Frank about ordering fan coils, Frank responded, “we are in the office working on yesterday and today” (emphasis added).

80Fifth, evidence from Nadine Torgerson, Chris Koroknay, and Daisy Chan supports that Frank took an active role at meetings where Sam Bellantonio and Carmine Turco were present. Nadine Torgerson’s evidence is that Frank made representation and assurances at these meetings about Bellsam’s ability to meet the budget and what steps Bellsam would be taking on the job. That evidence was unshaken on cross-examination. Bellsam tendered no evidence to dispute it or supporting that either Sam Bellantonio or Carmine Turco objected to Frank speaking on Bellsam’s behalf at meetings.

81Sixth, two of Bellsam’s subcontractors, Lawrence Lascelles and Ron Edelenbos, gave evidence that Frank Bellantonio was directing their work on the project. Mr. Edelenbos gave specific evidence that Sam Bellantonio had directed him to deal with Frank, that Frank would “override” Carmine Turco on decisions in meetings, and that Carmine Turco would defer to Frank’s decisions on how to proceed. They gave evidence that, even when Sam Bellantonio was on-site, it was Frank who led meetings.

82Neither Mr. Lascelles nor Mr. Ron Edelenbos were cross-examined, nor was any objection taken to their evidence. It was also not directly disputed by any evidence tendered by Bellsam. I thereby accept the evidence of Mr. Lascelles and Mr. Edelenbos about Frank’s role on the project and deference to him by Sam Bellantonio and Carmine Turco.

83Seventh, a witness statement was obtained by Bellsam’s lawyer from Chris Koroknay in September 2019. It was recanted by Mr. Koroknay and was the subject of some of his trial testimony. His evidence at trial, which I accept, is that Frank Bellantonio asked him to meet with Bellsam’s lawyer to sign the witness statement, that he felt pressured by Frank to do so, and that only Frank, and no other Bellsam representative, was present with Bellsam’s lawyer when Mr. Koroknay was interviewed. The signed witness statement was favourable to Bellsam’s position.

84There is no clear evidence that Frank Bellantonio had actual authority to act on behalf of Bellsam. The two individuals who presumably would have been able to confirm whether Frank did or did not have such authority were not called at trial: Sam Bellantonio and Carmine Turco. As I have previously noted, Theresa Zumpano’s evidence is that they were the only Bellsam representatives with authority to bind Bellsam. They both had direct dealings with Frank about the project. They are, in my view, the individuals with the best knowledge on whether Frank was authorized to deal with the Torgersons on Bellsam’s behalf and, if he was not, the nature of the relationship between Bellsam and Frank on this project.

85Nevertheless, the Torgerson Defendants bear the evidentiary onus of proving agency. While the absence of Sam Bellantonio and Carmine Turco does give rise to adverse inferences in other contexts, it would unfairly alleviate the Torgerson Defendants’ onus to apply an adverse inference on the issue of agency.

86There is, however, more than sufficient objective evidence supporting that Frank Bellantonio had ostensible authority to act on behalf of Bellsam in the course of the project. Notably, there are many examples prior to Bellsam’s December 2018 quote being issued.

87Frank evidently acted on behalf of Bellsam in the dealings between the Torgersons and Bellsam on the prior Yorkville project. On that project, Frank negotiated the contract with Nadine Torgerson, directed work, and engaged at least Northstar on behalf of Bellsam. Bellsam’s involvement in this project flowed from Nadine Torgerson reaching out to Frank. His conduct on this project after that point is similar to his conduct on the prior Yorkville project, as already discussed. That includes acting on behalf of Bellsam at meetings and on-site walkthroughs prior to December 2018, even when Sam Bellantonio and Carmine Turco were also present. The uncontested evidence of the Torgerson Defendants’ witnesses is that Sam Bellantonio and Carmine Turco permitted Frank to speak on behalf of Bellsam.

88I find that the prior role of Frank for Bellsam combined with the evidence of Frank’s role during negotiations and the deference shown to Frank by Sam Bellantonio and Carmine Turco (which was not successfully challenged by cross-examination or through Theresa Zumpano’s evidence) is sufficient evidence to find that Bellsam, by its conduct, represented that Frank had authority to act for Bellsam in the contract negotiations. I find that Nadine Torgerson reasonably relied on Frank’s apparent authority in communicating with him during the course of those negotiations.

89I am reinforced in that view by the lack of any cogent evidence supporting that any Bellsam representative gave notice to the Torgersons that Frank had no role, involvement, or authority in the company. Theresa Zumpano did sent an email on January 24, 2019 to Chris Koroknay, Daisy Chan, and Nadine Torgerson (via Dr. Cory Torgerson’s email, which Ms. Torgerson’s evidence supports she was using), in which Ms. Zumpano requested that any changes, notes, questions, drawings only be sent Bellsam’s email address. She stated that “we want to make sure from here on in we receive everything on this project and not missed [sic] due to being sent to another email address.” Prior to that email, there had been numerous emails sent only to Frank, which appear to have been forwarded to Bellsam. However, nothing in Ms. Zumpano’s email supports notice that Frank lacked authority to act for Bellsam.

90Bellsam had the opportunity to tender evidence disputing the Torgerson Defendants’ evidence of Frank’s role at meetings and on-site. It did not do so. Bellsam similarly had the opportunity to tender evidence supporting that Sam Bellantonio, Carmine Turco, or another representative of Bellsam clearly relayed that Frank had no authority. It did not do so. Notably, during examinations for discovery, Bellsam undertook to identify the evidence on which Bellsam relies to support that it communicated that Frank was not Bellsam’s agent. The answer to that undertaking was general and provided nothing specifically communicated to the Torgerson Defendants.

91In my view, a reasonable person looking at the deference by Sam Bellantonio and Carmine Turco to Frank at meetings, Frank’s conduct, the circumstances of Frank’s role in the 2008 project and the current project, and the totality of the dealings between Bellsam, Frank, and the Torgersons would conclude that Frank had apparent authority on behalf of Bellsam.

92I accordingly accept and find that, in all the circumstances, Nadine Torgerson reasonably believed and relied upon Frank being a representative of Bellsam in communicating the acceptance of Bellsam’s offer. Since Frank had at least ostensible authority to act on behalf of Bellsam, Ms. Torgerson’s text message was a valid form of communicating acceptance.

iv. Was there agreement on all essential contract terms?

93In my view, there was agreement on all essential contract terms of the construction contract, namely a stipulated price of $2.3 million, a scope of work defined with reference to the Studio CK and Northstar drawings, and an implied or reasonably inferred timeline for completion by May 31, 2019.

94The price listed in Bellsam’s December 2018 quote is unequivocal. There is no basis to find any lack of certainty on a base contract price.

95The drawings available to Bellsam at the time of the December 2018 are in evidence. They are quite detailed and, as already noted, are specifically referenced in the quote. A set of drawings is sufficient to meet required certainty on scope of work for a construction contract, even if changes to those drawings may give rise to claimable extras: The Gatti Group Corp. v. Zuccarini, supra at para. 84. I am satisfied that the Studio CK and Northstar drawings are more than sufficient to support certainty of scope of work. Moreover, the discovery read-ins support that Bellsam agrees that the work detailed in those drawings was within its scope of work.

96Bellsam argues that there cannot have been an agreed scope of work at the time, in part, because subsequent drawings, site instructions, and design revisions were provided to Bellsam throughout the course of the project that materially affected both the scope and price of the work. However, such scope changes are not atypical during a construction project. The fact that there were subsequent changes does not alter my view that the Studio CK and Northstar drawings provided sufficient detail and certainty on a base scope of work. Whether there were changes to those drawings or the scope of work, including additional items of work not contemplated in them, and whether Bellsam is entitled to compensation or extensions in contract time from any subsequent changes are separate issues.

97Bellsam submits that the December 2018 quote does not include a schedule, which is only found in the January 2019 quote. In my view, that is immaterial. Bellsam has put forward no case law supporting that failing to agree to a schedule, or even a completion date, is fatal to a contact being formed. Agreement on a precise schedule of work is not required. Agreeing on a timeline for completion does not necessarily mean a specific project schedule with milestones. A completion date is sufficient, even if a specific schedule for the work had not been discussed or agreed.

98Moreover, case law supports that where no completion date is specified in a contract a date can be fixed on reasonable notice to the contractor: Gilbank v Cooper and English, 2021 ONSC 4125 at para. 123. Case law also supports that, if an agreement is silent on a completion date, that is not fatal. The contractor is entitled to a reasonable time to complete the work: Aylward v Rebuild Response Group Inc., 2018 ONSC 4800 at para. 33; Goulimis Construction Ltd. v. Smith, 2014 ONSC 1239 at para. 20.

99Here, evidence supports that a completion date of May 31, 2019 was discussed in August 2018 and understood by the parties prior to Bellsam issuing its December 2018 quote. During cross-examination, Nadine Torgerson testified that Carmine Turco had advised prior to December 2018 that Bellsam would require 16-20 weeks to complete the job. That is consistent with being able to complete the work by May 31, 2019. The fact that Nadine Torgerson made requests for construction costs and a construction schedule after December 2018 does not negate a finding that the parties understood at the time of the December 2018 quote that Bellsam’s work was to be completed by May 31, 2019. There is no evidence from Bellsam disputing Nadine Torgerson’s evidence on that deadline date.

100There is no evidence that Bellsam expressly agreed to the May 31, 2019 completion date in or prior to December 2018. However, Nadine Torgerson had given reasonable notice to Bellsam that the project had to be completed by May 31, 2019 and Bellsam’s offer was made in that context. It did not identify any different completion date. I find that agreement to a completion date of May 31, 2019 is reasonably implied.

101I am reinforced in that view by Bellsam’s January 2019 quote, which makes specific reference to a project duration of 18-20 weeks starting from January 21, 2019. That is substantially the same outside completion deadline.

v. Was there legally sufficient consideration?

102The parties disagree on whether there was consideration for a contract in December 2018. Consideration is fundamental to a valid and enforceable contract.

103Although not cited by either side, the Court of Appeal has explained the importance of consideration in Braiden v. La-Z-Boy, 2008 ONCA 464, at para. 47, as follows:

A contract is an exchange of promises, acts or acts and promises as a result of which each party to the contract receives something from the other. For a contract to be binding, consideration must flow between the parties. Absent consideration, there is no contract.

104Bellsam submits that there was no consideration from the Torgerson Defendants. Specifically, it argues that the December 2018 quote contemplated a deposit, which was never paid. In fact, no payments were made to Bellsam until after the January 2019 quote was issued, work had commenced, and an invoice based on the January 2019 quote had been sent.

105The Torgerson Defendants argue that it was sufficient for there to have been an exchange of promises between the parties, namely the supply of services and materials by Bellsam in return for payment by 2567714 Ontario Inc. In support of that position, they point to S.M. Waddams, The Law of Contracts (7^th ed.) (Toronto: Thomson Reuters, 2017) at pp. 79-80, in which Professor Waddams discusses consideration as follows:

A bargain is not formed merely by mutual assent. There must be some exchange of values. Something must be given or promised in exchange for the promise sought to be enforced.

106They further point to the decisions in Covedale Developments Inc. v. 1589380 Ontario Limited, 2010 ONCA 16 and Hafeez v. Sunaric, 2015 ONSC 4065 (Div Ct) as supporting that a mutual exchange of promises is legally sufficient consideration.

107In Covedale, the Court of Appeal upheld an order for summary judgment granting specific performance, dismissing three grounds of appeal raised by the appellants. One was that there was no consideration for an agreement between the parties to parcel the subject lands and construct an automobile dealership. In dismissing that ground of appeal, the Court of Appeal accepted that “clearly worded mutual promises to develop the property” was sufficient consideration: Covedale Developments Inc. v. 1589380 Ontario Limited, supra at para. 7.

108In Hafeez, the Divisional Court overturned a Small Claims Court trial decision that had dismissed a plaintiff’s action, in part, on the ground that the agreement was unenforceable because it did not provide for any consideration. The Divisional Court held that the agreement was supported by consideration: the promise to pay for damages up to $15,000 by one party and the other party forgoing his right to claim more than $15,000: Hafeez v. Sunaric, supra at para. 15.

109In my view, as supported by the case law before me, there is a distinction between a contract contemplating legally sufficient consideration and performance of that contract. Here, the agreement was for Bellsam to provide services and materials to complete the build-out of the medical and surgery clinic in return for payment. Those mutual promises are legally sufficient consideration to support a valid contract. Whether the required services and materials were actually provided and whether payments were made when they were supposed to be made are matters of performance. They do not change that there is consideration for the contract.

vi. Who are the parties to the contract?

110Bellsam submits that its contract was with all three of the Torgerson Defendants. The Torgerson Defendants disagree, submitting that the contract was only between Bellsam and 2567714 Ontario Inc. I need not address the factual dispute, since I agree with the Torgerson Defendants that Bellsam is bound by its pleaded position, which is contrary to its position at trial. However, I find in any event that the evidence supports that Nadine Torgerson negotiated, accepted, and entered into the contract with Bellsam solely in her capacity as a director and officer of 2567704 Ontario Inc. Dr. Torgerson had no role in that process. The evidence does not support that the parties understood or agreed that either Dr. Torgerson or Ms. Torgerson would be parties to the contract in their personal capacities.

111The Rules of Civil Procedure apply in a lien action, except to the extent of any inconsistency with the CLA: CLA, s. 67(3). In my view, the majority of rules for pleadings outlined in the Rules are not inconsistent with the CLA and apply in lien actions.

112Subrule 25.06(1) of the Rules requires a plaintiff to include in its statement of claim a concise statement of the material facts on which it relies for its claim, but not the evidence by which those facts are to be proved. When facts are pleaded in a statement of claim, they are admissions on which a defendant is entitled to rely: Alumtech Bond Inc. v. Epic Precast Ltd., 2021 ONSC 4447 at para. 14.

113Dovetailing that requirement is subrule 25.07(1), which requires a defendant to admit every allegation of fact in the statement of claim that it does not dispute. Subrule 25.07(2) also deems all allegations of fact that are not denied in a defence to be admitted, unless the defendant pleads having no knowledge of the fact.

114At para. 8 of the statement of claim, Bellsam expressly pleads that it supplied services and materials in accordance with an agreement between Bellsam and 2567714 Ontario Inc. At paras. 4, 5, and 7 of the statement of claim, Bellsam pleads only that Dr. Torgerson and Ms. Torgerson are the officers and directors of 2567714 Ontario Inc., and the individuals “responsible for giving instructions to the Plaintiff.” Although the Torgerson Defendants are collectively alleged to be liable to Bellsam, nothing in the statement of claim pleads an agreement with Dr. Cory Torgerson or Nadine Torgerson in their personal capacities.

115At para. 4 of the statement of defence and counterclaim, the Torgerson Defendants plead that 2567714 Ontario Inc. hired Bellsam as general contractor. At para. 5, they admit that Dr. Torgerson and Ms. Torgerson are the directors and officers of the corporation, but further plead that they acted solely in those capacities and not in their individual capacities.

116Although a reply pleading is not contemplated by the CLA, Bellsam delivered a reply in conjunction with its defence to counterclaim. At para. 3 of that pleading, Bellsam does generally deny the allegations in paras. 4-5 of the statement of defence and counterclaim. However, subrule 25.06(5) of the Rules precludes Bellsam from making an allegation in a subsequent pleading that is inconsistent with its prior pleading, requiring instead that the first pleading be amended. In any event, at para. 5 of the reply and defence to counterclaim, Bellsam states that, “with respect to the contract on this project Bellsam repeats and relies upon the statements contained in the Statement of Claim.”

117Bellsam’s statements in its pleadings on the contracting parties are, in my view, a concession of a material fact on which the Torgerson Defendants are entitled to rely. As a result, reading the pleadings together, all parties agree in their pleaded positions that the contract was between only Bellsam and 2567714 Ontario Inc. Bellsam’s position at this trial of an issue is inconsistent with its pleaded position. It cannot be advanced without first amending those pleadings, which was not done.

118Even if I am wrong in that, I would have found that the evidence supports that the contract was never intended to be with either Dr. Torgerson or Ms. Torgerson in their personal capacities.

119As plaintiff, Bellsam has the evidentiary onus of proving the parties to the contract. Bellsam correctly points out that parties who are contracting on behalf of a corporation must be clear that it is being done on behalf of the corporation and not in a personal capacity. The onus is on the individual to make it known that they are acting for a corporate principal: Spoke v Delinia Ltd., 2016 ONSC 1923 at paras. 32 and 34.

120However, here, there is no signed contract and no evidence supporting that Bellsam actually believed or reasonably believed that it was contracting with either Dr. Torgerson or Ms. Torgerson personally. Notably, evidence supports that Dr. Torgerson was not involved in any of the contract negotiations, that he did not discuss the terms of the agreement with Bellsam or its representatives, and that he did not sign back any of Bellsam’s quotes. All of Bellsam’s contract and material project dealings were with Nadine Torgerson.

121Bellsam argues that Nadine Torgerson was an authorized agent for Dr. Torgerson. However, as Bellsam itself argued in dealing with Frank Bellantonio, the onus of proving agency lies with the party alleging agency: Bougadis, Chang LLP v. Papastamoulis, supra at para. 33.

122Bellsam has failed to tender sufficient evidence to meet its onus. The evidence before me supports that Nadine Torgerson was the only defendant involved in negotiations. However, there is simply no evidence supporting that Dr. Torgerson represented that Ms. Torgerson was authorized to negotiate on his behalf for a contract in his personal capacity or that Bellsam relied on that representation in entering the contract. Ms. Torgeson’s evidence is that she expressly told Frank Bellantonio, sometime in spring 2018, that the property would be purchased and the project built through a new corporation, just as had been done for the prior Yorkville project.

123Bellsam’s failure to call any witness involved in the contract negotiations is fatal to its position on agency. Theresa Zumpano did not participate in those discussions. In any event, she gave no evidence (and was not capable of giving evidence) on representations of authority that were made by Dr. Cory Torgerson or Nadine Torgerson and which, if any, of those representations were relied upon.

124A similar adverse inference to the one I have already drawn is appropriate here, namely that the testimony of Sam Bellantonio and Carmine Turco, who were involved in the relevant discussions and negotiations, would have supported the Torgerson Defendants’ position that all parties understood the contract would be with a corporate entity.

125In addition, the factual circumstances surrounding the parties dealings is inconsistent with Bellsam’s position that there is confusion over whether it would be contracting with a corporate entity. I note the following:

(a) Bellsam’s prior contract with the Torgersons was with Torgerson Medical Professional Corporation. That first project was work on a similar clinic, albeit a much less substantial job.

(b) Bellsam issued both its April 2018 and January 2019 quotes to “Dr. Cory Togerson [sic] Clinic”. That is a business, not an individual. It issued its December 2018 quote, which I have held formed the contract, to “Togerson [sic] Medical Professional Corporation”. That is consistent with the prior project and an understanding that a corporate entity would similarly be the contracting party.

(c) Bellsam’s first invoice in January 2019 was issued to Dr. Torgerson personally, but Nadine Torgerson’s undisputed evidence is that Bellsam was asked to re-issue the invoice to 2567714 Ontario Inc. and thereafter continue issuing invoices to that entity. Bellsam did just that.

(d) Theresa Zumpano’s cross-examination evidence also supports that Bellsam was aware that the Torgersons were acting through a corporation, although her evidence was unclear on which corporation.

126For these reasons, I find that the only parties to the contract were Bellsam and 2567714 Ontario Inc. That finding does not, however, preclude Bellsam from pursing Dr. Torgerson and Ms. Torgerson in their personal capacities to the extent such a claim is permitted by the CLA.

c. Did Bellsam’s revised quotation in January 2019 form or amend the contract?

127Since the contract was formed in December 2018, I need only consider whether Bellsam’s revised quote dated January 15, 2019 had any amending effect. I find that it did not for three main reasons: (i) the quote did not clearly outline any scope of work, (ii) it was never accepted by any the Torgerson Defendants, and (iii) there was no consideration.

128The revised quote was sent in response to an email from Nadine Torgerson on January 15, 2019 to Frank Bellantonio, Carmine Turco, and Bellsam’s general email. Ms. Torgerson requested a more detailed outline of the construction budget. Her email was sent following a request from Desjardin for information needed before it would release the construction draws. Two days later, having received no response, Ms. Torgerson followed up on the email, requesting “the construction budget (at least an overview) of what you have so far, as well as a construction schedule please.”

129On January 21, 2019, Theresa Zumpano emailed the quote dated January 15, 2019. The four-page quote, which was not signed by any representative of Bellsam, was issued to “Dr. Cory Togerson [sic] Clinic” and addressed to “Dr. C. Togerson [sic]”. The first page states as follows:

This is to confirm our preliminary price of $ 2,599,340.00 (Two million, six hundred ninety-nine thousand, three hundred forty dollars – plus HST) for the breakdown below.

Included In Our Quote: -Electrical, Plumbing, HVAC, Mechanical, Floors, Cabinets, Paint, Carpentry, Walls/Ceiling & Demo

Our Terms: -30% deposit

-20% upon rough in

-40% upon cabinet installation

-10% 10 days after move in

Should you have any questions, please call our office at your earliest convenience. We look forward to hearing from you.

130Unlike the December 2018 quote, the summary of included work did not refer to any drawings from Studio CK or Northstar Engineering. The last two payment milestones were also changed, respectively, from 40% upon rough in completion to 40% upon cabinet installation and from 10% upon completion to 10% payable 10 days after move in.

131The January 2019 quote also included three additional pages. The first page lists the trades who would be performing certain disciplines of work, noting Bellsam as self-performing the electrical and cabinet work. The second page lists seven excluded items of work. Evidence at trial was unclear on whether these items were contemplated in the drawings issued by Studio CK or Northstar Engineering. The third page outlined a “starting time” of January 21, 2019 and project duration of 18-20 weeks. It identified ten stages of work, of which five included estimated durations in weeks.

132Although seven express exclusions are identified, nothing in the January 2019 quote outlines the scope of work intended to be included in the general work description of “Electrical, Plumbing, HVAC, Mechanical, Floors, Cabinets, Paint, Carpentry, Walls/Ceiling & Demo.”

133I agree with the Torgerson Defendants’ submission that the general descriptions in the January 2019 quote are not sufficiently specific or detailed to have allowed the parties to understand and agree on the precise scope of work that Bellsam was proposing to perform. The project involved build-out of a 12,000 sq. ft. space. There is also nothing indicating what, if any, changes were being proposed to work to be performed under the existing contract as I have found was already formed. Simply listing general categories of work is insufficient to allow parties to reach consensus ad idem on the scope of work: Summers v. Harrower, 2005 CanLII 50261 (ON SC) at paras. 1, 34, and 44.

134Theresa Zumpano gave evidence at trial that the December 2018 quote was not based on drawings and that the January 2019 quote was prepared after Bellsam had reviewed and priced them. Since Ms. Zumpano was not involved in pricing the drawings or preparation of the January 2019 quote, her evidence on how it was prepared is, at best, hearsay. There is also no reference to any drawings in the quote. I give her evidence no weight.

135Regardless, I find that the January 2019 quote was not accepted by any of the Torgerson Defendants and, in any event, there is no evidence of any consideration for an increase in price.

136Bellsam correctly points out that there is no evidence of any written complaint, protest, objection, or notice to Bellsam of any dispute over the revised price in the January 2019 quote. However, inherent in that submission is a reversal of Bellsam’s evidentiary onus. As plaintiff, Bellsam bears the evidentiary onus of proving that the January 2019 quote was accepted by any of the Torgerson Defendants. It has failed to meet that onus.

137There is no evidence that Nadine Torgerson or Dr. Cory Torgerson communicated express acceptance of the quote to any of Bellsam’s representatives by email, text, or other means. Bellsam relies on their conduct after the quote was sent.

138The only evidence at trial on what was done immediately after the quote was sent was Nadine Torgerson’s evidence. Ms. Torgerson testified that, after receiving the quote, she telephoned Frank Bellantonio and raised concerns with the lack of breakdown of the contract price, objected to the $400,000 increase in contract price that exceeded the $2.4 million budget, and requested a breakdown of any extra work for which Bellsam was seeking additional payment. Ms. Torgerson’s evidence is that Frank told her that he would speak to Sam Bellantonio and get back to her, that she followed up with him in February and March, and that the requested breakdown was never provided.

139I found Ms. Torgerson’s evidence on her discussions with Frank to be both credible and reliable. I have already found that Frank had at least ostensible authority for Bellsam in contract negotiations. Bellsam tendered no evidence contradicting Ms. Torgerson’s affidavit and oral testimony on her discussions with him, which was steadfastly maintained during her cross-examination. Sam Bellantonio would have had relevant evidence on whether Ms. Torgerson’s concerns had, in fact, been raised and whether they were known to Bellsam. I draw a further adverse inference from Bellsam’s failure to call him as witnesses that his testimony would have corroborated Ms. Torgerson’s evidence.

140Bellsam also relies on Nadine Torgerson arranging payment of Bellsam’s invoices as conduct evidencing acceptance. Bellsam’s invoices were based on the price in the revised January 2019 quote. The fact of those payments is undisputed, but I find Ms. Torgerson’s evidence on why she made the payments to be credible and reasonable in the circumstances. Specifically, Ms. Torgerson testified that she had raised concerns with Frank about the amount being incorrectly billed based on the January 2019 quote, which had not been agreed, but that she was prepared to pay Bellsam the amount in the invoice since they had been working without payment and had performed more work than the amount invoiced. Combined with Ms. Torgerson’s undisputed evidence that she continued to raise concerns with Frank, I do not accept Bellsam’s argument that payment of the invoices amounted to acceptance of the revised quote.

141Bellsam argues that Ms. Torgerson failed to advise Desjardin that the contract price reflected in the invoices sent for progress draws was incorrect. I do not view that as material. Desjardin was not a party to the contract and Ms. Torgerson’s evidence supports that the January 2019 quote was not provided to Desjardin. It had received only the December 2018 quote. In my view, what a third party relied upon in issuing a construction draw is immaterial to the intentions of the parties to a construction contract and the terms of their contract.

142Bellsam submits that Nadine Torgerson knew that Bellsam would not perform the work for $2.3 million. Chris Koroknay’s witness statement includes some paragraphs that tend to support that he may have understood that to be the case, but Mr. Koroknay recanted that witness statement and, in any event, his subjective understanding of Ms. Torgerson’s state of mind does not trump her own evidence. Ms. Torgerson’s evidence was both credible and reliable. Moreover, since Mr. Koroknay did not adopt that statement at trial, it is no more than hearsay.

143Bellsam also argues that the scope of work and extras were discussed at a meeting in March 2019, which took place at Bellsam’s offices between Nadine Torgerson, Chris Koroknay, Daisy Chan, Sam Bellantonio, Carmine Turco, and Frank Bellantonio. Ms. Torgerson’s evidence is that the meeting was for Bellsam to provide a breakdown of the requested contract price increase, a detailed outline of pricing for Bellsam’s work, and a construction schedule. The document provided by Bellsam at the meeting did not address them. Evidence from Ms. Torgerson, Chris Koroknay, and Daisy Chan (the only witnesses at trial who were in attendance) is consistent that Bellsam’s representatives only wanted to discuss extras.

144Bellsam’s argues that there is no evidence of any objections being raised at the meeting to the base price of the January 2019 quote. However, Bellsam has the evidentiary onus of establishing acceptance. Its position that the scope of work and contract were reviewed in detail at the meeting is unsupported by the evidence before me. In particular, there is no evidence that the January 2019 quote was specifically raised or discussed. Although present in Bellsam’s offices, Theresa Zumpano did not attend the meeting. At best, her evidence supports only that she may have occasionally overheard parts of the meeting. I thereby give her evidence on what occurred no weight. Bellsam called no other witnesses and did not obtain admissions from the remaining trial witnesses contradicting Ms. Torgerson’s account of events. There is simply no evidentiary basis to find that Nadine Torgerson agreed to the January 2019 quote at the meeting.

145Following the meeting, Chris Koroknay circulated a spreadsheet that he prepared based on numbers from his own notes of the meeting. Bellsam points to that document as support for its position on what occurred and what was agreed at the March meeting. However, Mr. Koroknay’s affidavit evidence is that the spreadsheet was only for informational purposes to outline the estimates of extras that Bellsam had discussed at the meeting. He further confirmed during cross-examination that he had not seen the January 2019 quote at the time of the meeting.

146Regardless, in my view, the evidence does not support a finding that Chris Koroknay had any actual authority to approve pricing on behalf of 2567714 Ontario Inc. To the contrary, the evidence of Ms. Torgerson, Mr. Koroknay, and Daisy Chan all support that Mr. Koroknay did not.

147The evidence also does not support that Bellsam reasonably believed that Mr. Koroknay had any such authority. The limited evidence tendered on Bellsam’s understanding of Mr. Koroknay’s role does not support a finding of agency. Notably, Theresa Zumpano conceded during cross-examination that Nadine Torgerson’s approval was required for all changes to work, all pricing for the project, and all extras. In my view, the evidence does not support a finding that Ms. Torgerson, by words or conduct, represented that Mr. Koroknay had authority to act on behalf of any of the Torgerson Defendants or that Bellsam relied on such a representation.

148In addition to the lack of any cogent evidence supporting acceptance of the January 2019 quote, Bellsam has also failed to address why the Torgerson Defendants would agree to a higher total contract price with a less clearly defined scope of work. It would have been commercially unreasonable to do so.

149For these reasons, I find that the January 2019 did not amend the contract that I have found was formed in December 2018. However, to the extent that the January 2019 quote included changes in the base scope of work contemplated in the Studio CK and Northstar drawings available to Bellsam in December 2018, my finding does not preclude Bellsam from pursuing claims arising from such changes.

V. Conclusion

150For the above reasons, I find and declare as follows:

(a) Bellsam and 2567714 Ontario Inc. entered into a contract for the construction of the subject premises for the price and scope of work as outlined in Bellsam’s quote dated December 16, 2018, with an agreed completion date of May 31, 2019.

(b) For greater certainty, the reference to “all drawings submitted by Studio CK & NorthStar Engineering” in the contract means the following drawings provided to Bellsam prior to December 16, 2018:

(i) Studio CK’s drawings appended at or attached to emails appended at exhibits 3-9, 19-31, and 34-65 of the affidavit of Christopher Koroknay sworn March 14, 2022; and

(ii) Northstar’s drawings appended as exhibits 13, 15, 17, and 19 to the affidavit of J. David Long sworn March 14, 2022.

(c) Neither Dr. Cory Torgerson nor Nadine Torgerson are parties to the contract in their personal capacities.

(d) Bellsam’s quote dated January 15, 2019 was not accepted by any of the Torgerson Defendants and thereby did not operate to vary or amend the contract.

VI. Costs & REPORT

151The parties do not wish to defer costs of this trial of an issue to the ultimate trial of remaining issues. Bills of costs have been exchanged and filed.

152I encourage the parties to agree on costs. If they cannot agree, then costs submissions shall be in writing. The Torgerson Defendants shall serve their submissions by February 3, 2023. Bellsam shall serve its responding submissions by February 22, 2023. The Torgerson Defendants shall be entitled to brief reply submissions by March 10, 2023. Submissions shall not exceed five (5) pages for primary submissions and two (2) pages for reply submissions, excluding any offers to settle and case law, and shall be submitted by email directly to my Assistant Trial Coordinator (ATC), Christine Meditskos, with proof of service.

153In accordance with the CLA, the results of a trial are to be embodied in a report in the prescribed form. It is open to the parties to prepare an interim report for issuance and confirmation or to defer formalizing my findings to a final report after all remaining issues in this reference have been tried and decided.

154If an interim report is to be issued, then a modified form of the form of report prescribed by the CLA is likely most appropriate the circumstances of this trial of an issue. I encourage the parties to discuss an appropriate form of draft interim report, which should be filed with my ATC by the deadline for reply costs submissions. If the parties wish to pursue an interim report, but cannot agree on its form, then my ATC should be so advised and an appropriate form will be addressed following release of my decision on costs.

155A further hearing for trial directions on remaining steps in this reference to an ultimate trial on the remaining issues may be arranged through my ATC.

ASSOCIATE JUSTICE TODD ROBINSON

Released: January 17, 2023

COURT FILE NO.: CV-19-628829

DATE: 2023 01 17

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Act, RSO 1990, c. C.30, as amended

B E T W E E N:

BELLSAM CONTRACTING LIMITED

Plaintiff / Defendant by counterclaim

• and -

2567714 ONTARIO INC., CORY TORGERSON, NADINE TORGERSON and CAISSE POPULAIRE VOYAGEURS INC.

Defendants / Plaintiff by counterclaim

REASONS FOR DECISION (Trial of an Issue)

Associate Justice Todd Robinson