Ontario Superior Court of Justice Cautions Contracting Parties to Carefully Consider Documenting Actions and Agreements

Campus Contracting Inc. v. Torbear Contracting Inc., 2023 ONSC 6782 

Reading Time: 4 Minutes (approx.) 

By: Alexandre Doucet (Articled Clerk) 

The Plaintiff, Campus Contracting Inc., entered into a contract dated December 22, 2005 (“the Contract”) with the Defendant, Torbear Contracting Inc., to provide material and labour for the installation of high-pressured concrete watermains and sewers at the Maple Pumping Station in Vaugh, Ontario. The contracted amount for this service was $1,407,050.00 plus applicable taxes.  

The Plaintiff claimed that it hadn’t been paid for the work performed and was owed $750,168.10 plus GST. The Plaintiff refused to continue the contracted work until payment was received, and work stopped around August 13, 2007. In response, the Defendant issued a notice of default on August 13, 2007, and declared the Plaintiff in default of the Contract on August 16, 2007. The Defendant alleged the work was deficient and that the Plaintiff abandoned the project, claiming damages for incomplete work along with damages for delay.  

The Contract included, among other functions, the installation of four pipes. These pipes failed their pressure tests multiple times. This usually indicates a leak stemming from failures around coupling and joints. At trial, expert evidence from both sides were heard to determine how the pipes leaked but since there was no documented evidence of a compaction test, there was no evidence the Plaintiff had adequately fulfilled their contracted duty to compact the soil under the pipes. The court therefore refused to accept evidence by the Plaintiff that disputed the Defendant’s conclusions [para 99-101].  

As for the breach of Contract, the Plaintiff provided no accounting evidence regarding the amounts owed and received from the Defendant, which meant it had no way of substantiating its loss [para 76]. Furthermore, a “pay when paid” clause in the Contract was also breached by the Plaintiff when they did not pay the Defendant the initial invoice, which would then entitle the Plaintiff to renumeration of that initial invoice. This meant the Plaintiff not only provided no evidence that they were owed any amount whatsoever, they also did not comply with their own contractual payment process [para 79]. 

As for whether the Contract was abandoned by the Plaintiff or unlawfully terminated by the Defendant, Justice Sutherland listed four factors to find that the Plaintiff abandoned the Contract. First, the lack of repudiating evidence from the Plaintiff regarding the reason for the leaks meant Justice Sutherland admitted only the Defendant’s expert evidence. The Plaintiff could not prove the leak was the Defendant’s fault. Second, the notice by the Plaintiff did not comply with the 10-day notice period provided in the Contract, breaching that term. Third, the Plaintiff could not prove on a balance of probabilities that its inability to complete the work was due to a breach of Contract by the Defendant. Instead, it appeared that the Plaintiff did not want to complete the work under its own volition. Finally, when the Plaintiff was provided a notice of default by the Defendant per the terms of the Contract, the Plaintiff never responded to the notice of default, breaching another term of the Contract [paras 113-117]. 

Justice Sutherland concluded that the Plaintiff was in breach of the Contract and that the Defendant was within its rights to terminate it [para 118]. 

Link: 2023 ONSC 6782 (CanLII) | Campus Contracting Inc v. Torbear Contracting Inc. | CanLII

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