Executive Summary: Key Legal and Evidentiary Issues

• Admissibility of business records challenged under the Evidence Act; court upheld their admissibility and reliability.

• Disagreement over whether extra work performed by the subcontractor was authorized under the subcontract terms.

• Court held there was no “pay when paid” clause, making the contractor directly liable regardless of owner payments.

• Submitting claims to the City was interpreted as acknowledgment by the contractor that the extra work was authorized and valued.

• Trial judge’s factual findings on scope, authorization, and valuation of disputed work were upheld as supported by the record.

• Appeal dismissed in full; no legal or factual errors warranting appellate intervention were found. Total monetary award: $1,051,165.18

Facts and outcome of the case

Background and parties

Harvie Construction Inc. (“Harvie”) entered into a contract with the City of Barrie for the “Lakeshore Drive Reconstruction Project.” Harvie subcontracted Atlas Dewatering Corporation (“Atlas”) to provide dewatering services for the project. Under the Construction Lien Act, RSO 1990, c. C.30, the City was the “owner,” Harvie the “contractor,” and Atlas the “subcontractor.”

Atlas claimed $950,509.91 from Harvie for work performed under the subcontract, including both base scope and additional work. Harvie disputed the claim, asserting that much of the additional work was not authorized. Harvie paid $330,639.11 to Atlas but admitted that $277,119.40 was still owed. The dispute proceeded to trial before Justice Healey.

Trial court decision

The trial judge found largely in favour of Atlas, concluding that Atlas was entitled to $852,416.50, plus $51,619.51 in prejudgment interest, and costs of $128,129.17.

Key findings included:

• The base subcontract price was $300,000 plus HST.

• The parties did not execute a formal written subcontract.

• The applicable agreement was found to be the “Second Quote,” which limited the base work to 160 days of dewatering and 1,000 metres of system length. Extra charges applied beyond these limits.

• The subcontract did not include a “pay when paid” clause.

• Extra work performed by Atlas, including environmental tanks, winterization, fuel, electricity, and extended discharge piping, was outside the base scope and compensable.

• Time and material reports prepared on-site by Atlas personnel were consistent, contemporaneous, and prepared in the ordinary course of business. These formed the basis for monthly invoices to Harvie.

• The trial judge found no corporate records or contemporaneous objections by Harvie indicating that the extra work was unauthorized at the time it was invoiced.

Appeal to the Divisional Court

Harvie appealed, arguing:

1. That the trial judge erred by admitting hearsay documents—spreadsheets and time/material records—without proper foundation as business records under the Evidence Act.

2. That the trial judge improperly inferred that Harvie accepted the extra work claims simply because it submitted those claims to the City of Barrie.

The Divisional Court (Corbett J., with Newton RSJ and Nakatsuru J. concurring) dismissed the appeal.

On the first issue, the court found that the trial judge correctly admitted the records under s. 35(2) and (4) of the Evidence Act. The records were made contemporaneously by on-site personnel, consistently prepared, and supported by invoices and source documentation. The trial judge considered both admissibility and weight, finding the documents “accurate and trustworthy.”

On the second issue, the court held that the inference drawn by the trial judge—that Harvie’s submission of Atlas’s claims to the City signaled acknowledgment of their validity—was supported by the record. Harvie’s principal testified that only claims it considered justified were submitted. Moreover, there was no “pay when paid” clause that might justify submission without acceptance. The trial judge found that no objection was raised contemporaneously regarding the disputed claims submitted to the City.

Final outcome

The Divisional Court found no extricable errors of law or palpable and overriding errors of fact. It concluded that the trial judge’s decision was thorough, grounded in the evidence, and free of legal error. The appeal was dismissed. Costs of $19,000 were awarded to Atlas, payable by Harvie within thirty days.

This decision (2025 ONSC 4672) affirmed the trial-level rulings issued in 2024 ONSC 1775, 2024 ONSC 2608, and 2024 ONSC 2877.

Total monetary award under this case: $1,051,165.18, broken down as follows:

• $852,416.50 in damages

• $51,619.51 in prejudgment interest

• $128,129.17 in trial costs

• $19,000.00 in appeal costs