Executive Summary: Key Legal and Evidentiary Issues

• Dispute arises from two construction subcontracts on the Finch West LRT project, involving unpaid invoices, unpaid holdback, and competing multimillion-dollar delay and backcharge claims.
• Central procedural issue is whether leave should be granted under the former Construction Lien Act to bring partial summary judgment motions within a lien reference.
• The court examines whether PNR’s liquidated claims for unpaid invoices and holdback can proceed by summary judgment while Mosaic maintains substantial, only partially quantified set-off and counterclaims.
• Mosaic’s inability or refusal to meaningfully quantify its alleged $45 million damages through the Scott Schedule process is scrutinized, including the impact of “uncrystallized” damages on the progress of lien proceedings.
• Interpretation and potential application of contractual limitation-of-liability clauses, which could cap Mosaic’s maximum recovery at 100% of each subcontract price, form a key legal issue.
• Outcome of this decision is procedural: leave is granted to PNR to bring partial summary judgment, and PNR is awarded $14,492.02 in costs of the leave motions, payable by Mosaic.

Facts of the case
PNR RailWorks Inc. (PNR) was retained by Mosaic Transit Constructors General Partnership (Mosaic) under two separate construction subcontracts on the Finch West Light Rail Transit (LRT) project in Ontario. Under the first subcontract, PNR was responsible for manufacturing, supplying, and installing the signal and train control system equipment and materials for the transit line. Under the second subcontract, PNR undertook track installation work along Finch West Avenue. PNR commenced two lien actions, both of which were directed into a reference under the Construction Act (governed by the former Construction Lien Act due to transition provisions). One action, Court File No. CV-24-722238, was designated as the lead reference file. PNR claims approximately $6.53 million for its signal work and approximately $9.38 million for its track work. While these global figures are substantial, the bulk of PNR’s overall claims relate to unliquidated damages arising from alleged project delays, rather than purely liquidated payment obligations. Mosaic, in response, has advanced significant set-off claims and counterclaims in both actions totalling about $45 million. These Mosaic claims include a delay and impact claim, back charges for subcontractors engaged to complete portions of PNR’s scope that Mosaic says it removed due to PNR’s performance, and a claim linked to allegedly wasted track materials supplied by Mosaic for PNR’s use. The litigation therefore centres on both straightforward payment issues (unpaid invoices and holdback) and complex delay and performance disputes on a major infrastructure project.

Procedural posture and nature of the motion
The decision in question does not determine liability or quantum on the underlying construction disputes. Instead, it addresses whether PNR should be granted leave to bring partial summary judgment motions within the lien reference. Under the former Construction Lien Act, summary judgment is not automatically available in a lien action. While the Rules of Civil Procedure apply to lien proceedings, summary judgment (and other interlocutory steps not expressly provided by the statute) require the “consent of the court” on proof that the step is necessary or would expedite the resolution of the issues in dispute. Against this statutory backdrop, PNR sought leave for partial summary judgment on a limited portion of its case. First, PNR asked to move for summary judgment on its liquidated contract claims for unpaid invoices and unpaid holdback under both subcontracts. Second, PNR sought to move for summary judgment to dismiss or stay Mosaic’s set-off claims and counterclaims, in whole or in part, on the basis that Mosaic’s damages are premature, speculative, and unsubstantiated. PNR conceded that its own delay-related claims are not suitable for summary judgment and should instead be determined at trial. Mosaic opposed leave, arguing that a partial summary judgment motion would add procedural complexity, delay the start of trial, and create a risk of duplicative or inconsistent findings, particularly because its case against PNR involves alleged breaches of contract, delay, and wasted materials.

Scope of the payment and lien issues
On the liquidated payment side, PNR focused its proposed motions on unpaid invoice and holdback amounts that it says have already been approved or otherwise earned under the subcontracts. For the signal work subcontract, PNR identified unpaid invoices in the amount of $1,132,605.76 and unpaid holdback of $840,932.26 retained from invoices that Mosaic otherwise paid. For the track work subcontract, PNR pointed to unpaid invoices of $867,167.45 together with unpaid holdback of $1,246,554.02. These components represent the more traditional debt-collection aspect of the lien proceedings, contrasting with the more complex and unliquidated elements of PNR’s delay claim and Mosaic’s large set-off claims. The court observed that lien actions are intended by statute to be summary in nature and that liquidated payment or debt-collection issues typically lend themselves well to summary judgment, especially where disputes concern whether work and invoicing were approved, whether services and materials were supplied, and whether the invoiced amounts are properly earned and currently payable. In this context, the court noted broader appellate guidance that summary judgment is “tailor-made” for enforcing liquidated claims and that courts should be reluctant to delay a creditor’s access to such summary procedures in appropriate cases.

Mosaic’s set-off and counterclaims and the evidence on damages
Mosaic’s defence and counterclaims rest on the assertion that PNR failed to perform in accordance with the subcontracts, delayed the project, and wasted materials supplied by Mosaic. Mosaic says that PNR’s conduct justified the removal of portions of PNR’s scope and supports its own claims for delay, impact, and associated costs. It argues that any adjudication of its set-off and counterclaims will require detailed findings on multiple issues, including interpretation of the subcontracts’ scope, schedule and coordination provisions, and limitations of liability; whether PNR’s work met technical and commercial requirements and the expected standard of care; whether PNR complied with the schedule and, if not, whether any delays were compensable; the root causes of delay; mitigation efforts by both sides; and the nature and quantum of damages, costs, and losses each party incurred. From Mosaic’s perspective, those issues are too complex and intertwined with liability to be separated into a discrete summary judgment exercise. PNR, however, framed its proposed motion differently. It contended that the focus should be on whether Mosaic has produced sufficient, properly quantified evidence of damages to demonstrate a genuine issue requiring a trial on its set-off and counterclaims. The court emphasized that, at trial, liability and damages are separate inquiries. Even if liability may not be apt for summary judgment on this record, a defendant still must show a genuine issue on damages to resist summary disposition of its monetary claims.

Scott Schedules, uncrystallized damages, and case management concerns
A major evidentiary and case-management theme in the decision is Mosaic’s handling of its alleged $45 million damages. The court had previously ordered a Scott Schedule process to structure and clarify Mosaic’s claims. Several hearings were held dealing with Mosaic’s non-compliance with the spirit of that order, and the court agreed with PNR that Mosaic had not meaningfully complied for a considerable period. Even after multiple iterations of the Scott Schedules, Mosaic continued to maintain that its total damages could not yet be reliably estimated, that expert evidence was required, and that certain documents apparently supporting its damages were litigation privileged. Mosaic conceded that some of its damages had not yet “crystallized.” PNR argued that the problem was not the absence of expert opinion but the lack of adequate underlying factual evidence and clear quantification of the various heads of loss. The court framed this as raising an important systemic question in construction lien practice: whether a defendant asserting delay damages is entitled to slow a lien claimant’s progress toward judgment until those damages crystallize, and, if so, how much litigation delay is fair and just in a statutorily summary proceeding. By allowing PNR to bring its proposed summary judgment motion, the court intended to force Mosaic, on a “best foot forward” evidentiary basis, to identify the components of its damages, the evidence supporting them, and whether any uncrystallized elements still raise a genuine issue requiring a trial.

Limitation of liability clauses and their potential impact
Although this decision is confined to leave for summary judgment, it also addresses the role of contractual limitation-of-liability provisions in both subcontracts. PNR contends that these clauses cap Mosaic’s maximum recovery at 100 per cent of each subcontract price, which, if correct, would reduce Mosaic’s maximum aggregate recoverable claim to approximately $20 million. PNR argues that the applicability of these clauses can and should be determined on summary judgment, alongside the questions of its unpaid invoices, unpaid holdback, and Mosaic’s provable damages. Mosaic responds that the limitation clauses cannot be interpreted in isolation and that their application will depend on the nature and extent of any liability ultimately found against PNR. The court notes that, for the purposes of the leave motion, there is no persuasive authority or argument establishing that the detailed nature and extent of liability must be determined before interpreting and applying the relevant limitation clause. While the court accepts that deciding the limitation-of-liability issue will not significantly reduce discovery or trial time—since Mosaic would still have to prove the same damages—the court views an early ruling on any liability cap as important for settlement dynamics, because the cap directly affects both parties’ risk assessments and bargaining positions in the ongoing reference.

Decision on leave and issues going forward
Having weighed the competing positions, the court concludes that granting leave will likely expedite the resolution of core issues in dispute. The judge emphasizes that he is seized of all aspects of the reference, including both motions and trial, which reduces concerns about inconsistent findings or wasted judicial resources when partial summary judgment is pursued. In this procedural context, whether time is spent on a partial summary judgment motion or on trial is more a matter of judicial case management than of duplication across different decision-makers. The court also notes that liquidated debt-collection claims, such as PNR’s unpaid invoices and holdback, are generally well suited to summary judgment, and that successful partial summary judgment could significantly narrow the scope and cost of discoveries and trial, particularly if Mosaic’s damages claims are dismissed or stayed, even in part. Accordingly, the court grants PNR leave to bring its proposed partial summary judgment motions on three defined issues: first, judgment on PNR’s claims for unpaid invoice amounts and unpaid holdback for both the signals work subcontract and the track work subcontract; second, dismissal or stay of Mosaic’s set-off claims and counterclaims for failure to prove damages (without deciding liability or causation on those claims at this stage); and third, if any portion of Mosaic’s claims survives, determination of whether the limitation-of-liability clauses in the subcontracts apply to cap Mosaic’s maximum recovery. The parties are directed to arrange a motions directions conference to timetable the steps for the summary judgment motions. In terms of immediate outcome and monetary relief, this decision does not resolve the underlying damages on the construction claims, and no award is made at this stage on PNR’s multi-million-dollar claims or Mosaic’s alleged $45 million damages. The only concrete monetary order concerns costs of the leave motion. Because PNR was successful in obtaining leave, it is presumptively entitled to its costs, and the court finds PNR’s partial indemnity costs request to be reasonable and consistent with Mosaic’s own outline. The court therefore orders Mosaic to pay PNR costs of $14,492.02, inclusive of HST and disbursements, within 30 days. As a result, in this decision PNR RailWorks Inc. is the successful party, and the total amount actually ordered in its favour is $14,492.02 in costs, with all other damages and monetary entitlements to be determined in the forthcoming summary judgment motions or at trial.