Executive Summary: Key Legal and Evidentiary Issues

• Dispute concerned the timing of Tobyn Park Homes Inc.’s payment obligations under a Construction and Cost Sharing Agreement (CSA) with 2324780 Ontario Inc. o/a Losani Homes.

• Central issue was whether Tobyn was required to make interim payments upon receipt of Progress Certificates or only after the City of Hamilton’s formal approval of the works.

• The relationship between the CSA and the annexed External Works Agreement (EWA) was examined to determine if the EWA’s terms overrode the CSA’s payment provisions.

• The parties’ communications and part performance were considered as evidence of their understanding of the payment schedule.

• Tobyn argued that delays in construction by Losani constituted a breach excusing late payment, but provided no supporting evidence or claim for damages.

• Calculation of interest owed on late payments was based on a 15% per annum rate, compounded monthly, as agreed in the CSA.

Background and facts

2324780 Ontario Inc. o/a Losani Homes and Tobyn Park Homes Inc. are land developers with adjoining residential developments in Stoney Creek, Ontario. The City of Hamilton required both parties to undertake construction and urbanization of roadways and related infrastructure, including storm and sanitary sewers and water works. To govern their obligations and cost sharing, the parties entered into a Construction and Cost Sharing Agreement (CSA). Under the CSA, Losani was responsible for all design and construction, while Tobyn agreed to share in the costs.

The dispute arose over when Tobyn was required to pay its share. Losani asserted that interim payments were due as Progress Certificates were issued by the consulting engineer, as set out in Article 2.02 of the CSA. Tobyn argued that payment was not due until the City of Hamilton gave formal approval and acceptance of the works, referencing the annexed External Works Agreement (EWA) between Losani and the City. Tobyn claimed that the EWA’s terms should override the CSA’s payment schedule.

Discussion of policy terms and clauses at issue

The court focused on Articles 2.02(a) and 2.02(b) of the CSA, which required payment within 20 days of delivery of each Progress Certificate by the consulting engineer. Tobyn relied on Article 17(c) of the EWA, which addressed the City’s acceptance of the works as complete. The court found that the EWA did not govern the timing of payments between Losani and Tobyn and that there was no conflict between the agreements. The CSA’s language was found to be clear and unambiguous, requiring interim payments as portions of the works were completed and certified. The court also considered the parties’ communications, which supported Losani’s interpretation of the payment schedule.

Outcome and decision

The Ontario Superior Court of Justice ruled in favor of 2324780 Ontario Inc. o/a Losani Homes. The court held that Tobyn Park Homes Inc. was required to make interim payments within 20 days of receiving each Progress Certificate and was liable for interest on all late payments. The court found no evidence that construction delays by Losani constituted a breach excusing Tobyn’s late payments. According to the agreed statement of facts, the total sum payable by Tobyn for its share of the total pre-interest cost of the works was $2,894,554.18, which Tobyn had already paid in installments. The parties agreed that, if interest was payable, the total owed by Tobyn as of the date of trial was $2,001,760.70. The court ordered Tobyn to pay Losani $2,001,760.70 plus 15% interest, compounded monthly, accruing after the trial date (May 1, 2025). The court urged the parties to agree on costs, with a schedule for submissions if they could not agree. As of the decision’s release, costs had not yet been determined. Losani Homes was the successful party, with a total monetary award of $2,001,760.70 plus ongoing interest, and costs to be determined if not agreed.