Executive Summary: Key Legal and Evidentiary Issues

• The court found a valid construction agreement existed based on an email exchange, not a later unsigned contract draft.

• Plaintiffs’ claims were dismissed due to failure to substantiate the amounts allegedly owed under construction liens and project costs.

• Defendants proved civil fraud by showing false invoices and misrepresentations in statutory declarations.

• Expert forensic and quantity surveyor evidence established significant financial discrepancies and overbilling.

• Testimony from independent witnesses and contractors discredited the plaintiffs’ invoicing practices.

• Damages of $1.13 million were awarded to the defendants by counterclaim, reflecting overcharges and project mismanagement.

Facts and outcome of the case

Background and parties involved
Phillip Deane Garrow and his company, ADC Projects Ltd., initiated legal action against Leslie Louie Sallay and his family members regarding unpaid construction fees linked to two residential renovation projects in Vancouver, British Columbia. The properties included units on York Avenue and West 1st Avenue. Mr. Garrow claimed over $84,000 in unpaid amounts under construction liens. In response, Mr. Sallay and his family members filed a counterclaim alleging breach of contract and civil fraud.

Mr. Garrow and Mr. Sallay were previously partners in other real estate developments, but that relationship deteriorated into litigation. In 2019, they entered into a new arrangement where ADC would manage the renovations of the West 1st Avenue Properties for a fixed project management fee of $93,000, as detailed in an email. However, Mr. Garrow later attempted to rely on an unsigned “Draft Contract” that introduced a different fee structure—a “costs plus” model capped at $95,000 plus GST.

Issues during construction and billing
Construction was delayed and marked by poor supervision, and the project was ultimately terminated by Mr. Sallay in 2020. He later discovered what he believed were fraudulent and duplicate charges within the invoices submitted by Mr. Garrow. These included payments to contractors who either never worked on the project or who had refunded payments. For example, a $25,000 invoice attributed to Jorgensen Custom Metal and Roofing was proven to be fabricated, and a $90,000 charge for Alexa Woodwork was shown to have been refunded.

Expert witness testimony, including that of a forensic accountant and a quantity surveyor, confirmed these discrepancies and further revealed inflated and unsupported charges. Testimony also uncovered that statutory declarations used to justify payments were falsely witnessed, with one fictitious notary allegedly employed by a firm that denied any such employee existed.

Outcome and damages
The court ruled in favor of the defendants by counterclaim—Mr. Sallay and his family. It held that a binding contract was formed based on the email agreement, not the unsigned draft. Mr. Garrow and ADC Projects Ltd. were found to have breached that contract and committed civil fraud through dishonest billing practices and misrepresentations.

The court awarded $1,134,157 in damages to Mr. Sallay, comprising both unsupported charges and proportional overpayments based on project incompletion. It also ordered the return of $25,910.33 held in court from a lien on one of the properties. Mr. Garrow’s claims, including those related to construction liens and unpaid holdbacks, were dismissed in full. While the court granted costs to the successful party, it declined to award special costs due to insufficient argument and evidence regarding litigation misconduct.