Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether additional dewatering work was authorized and payable beyond the base subcontract price

• Admissibility of business records used to substantiate the subcontractor’s claims for extra work

• Legal interpretation of subcontract terms, including alleged "pay when paid" provisions

• Inference drawn from the contractor’s submission of the subcontractor’s invoices to the owner

• Determination of whether extra work fell within the scope of the agreed contract

• Standard of review on appeal concerning factual findings and legal errors

Facts and procedural background

Harvie Construction Inc. entered into a contract with the City of Barrie for a municipal infrastructure project known as the Lakeshore Drive Reconstruction Project. Harvie then subcontracted Atlas Dewatering Corporation to provide dewatering services required for the execution of the work. The parties did not execute a formally signed written subcontract, although both agreed on a base subcontract price of $300,000 plus HST. Atlas later claimed additional amounts for work it alleged was beyond the scope of the original agreement.

Atlas submitted monthly invoices to Harvie, totalling over $1.1 million, which included claims for extra work. Harvie paid approximately $330,000 but disputed the remaining amount, contending that many of the extras were unauthorized and not properly documented or approved. The trial judge ultimately found in favor of Atlas, holding that Atlas was entitled to a balance of $852,416.50, plus prejudgment interest and costs, largely accepting the subcontractor’s evidence and records.

Appellate review and legal findings

Harvie appealed the trial judgment to the Ontario Divisional Court. It argued that the trial judge erred in law by admitting and relying on hearsay documents—namely, spreadsheets and time/material reports—as business records. It also claimed the trial judge made legal errors in determining which extra work was authorized and in inferring acceptance based on Harvie’s act of forwarding Atlas’ invoices to the City.

The Divisional Court dismissed the appeal. It held that the trial judge properly admitted the records under section 35 of the Evidence Act as business records made in the ordinary course of business. The court noted that while the trial judge did not expressly address admissibility at every turn, she made sufficient findings regarding the records’ reliability and trustworthiness. The documents were prepared contemporaneously by Atlas’ workers and were submitted regularly with invoices, supported by other documentation.

Further, the court found that the inference drawn by the trial judge—that Harvie had accepted the extra work when it submitted the related invoices to the City—was appropriate in context. There was no “pay when paid” provision in the subcontract, and Harvie’s own evidence and conduct did not support its position that the extras were unauthorized. The court emphasized that factual findings were well-grounded in a thorough review of the voluminous record and there were no palpable and overriding errors.

Conclusion and disposition

The appeal was dismissed in full. The Divisional Court upheld the trial judge’s decision awarding Atlas over $852,000 in unpaid work, along with interest and trial costs. Additionally, Harvie was ordered to pay $19,000 in appeal costs. The judgment reaffirms key principles in construction law regarding subcontractor payments, business record admissibility, and the scope of trial court discretion in fact-finding.