Executive Summary: Key Legal and Evidentiary Issues

• Central dispute over unpaid renovation invoices under a detailed “Main contract” and multiple written and unwritten “extra work” agreements for a triplex renovation.

• Credibility of cash-payment records and handwritten notes was pivotal in determining whether substantial alleged cash payments had in fact been made to the contractor.

• Allocation of responsibility for construction delays turned on the owners’ refusal to respect the contractual payment schedule versus the contractor’s alleged abandonment of the site.

• Quality of the work and alleged construction deficiencies, including fire-code and bathroom waterproofing issues, depended heavily on an expert report from a related architect whose opinion the Court ultimately found unreliable.

• Tenants’ cross-demand for completion costs, remedial work, lost rental income, moral damages and punitive damages failed largely for lack of documentary proof and causal connection.

• Judicial compensation (set-off) was applied, recognizing limited proven completion costs for unfinished items while still enforcing the contractor’s larger claim for unpaid contract and extra-work invoices.

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Background and parties

The case concerns a renovation dispute between 6148018 Canada Inc., operating as Acadian Construction and Renovation, and homeowners Soheila Khaleghi and Fereydun Riahi, distant relatives of the company’s principal, Mr. Saeed Sam. The defendants had purchased an aging three-storey triplex in Côte-Saint-Luc, Quebec, comprised of a ground-floor unit with partial basement and garage, a separate upper-floor unit, and a separate basement apartment. The building was about 60 years old and required extensive modernization and corrective work. Mr. Sam was an experienced contractor who had worked in construction since his youth and for roughly two decades in Canada. The defendants were recent immigrants with no prior Canadian renovation experience and limited English; they relied heavily on Mr. Sam, who explained the contract in Farsi before they signed.

Renovation agreements and extra work

On 20 January 2018 the parties signed a detailed 14-page “Main contract” for major renovations to all three levels. The work included demolition and reconstruction of five bathrooms and a powder room, three kitchens, two laundry rooms and the furnace room; new plumbing and electrical wiring; hot-water tanks for each floor; wall, ceiling and floor removal and rebuilding; removal of carpeting and radiators; sanding and refinishing of existing wood floors; new laminate in the basement and a new room on the ground floor; and plastering and painting throughout. The contract specified that the homeowners would purchase all finishing materials such as tiles, vanities, faucets, sinks, tubs and toilets within defined price limits; the contractor supplied only the “rough” materials and basic construction. Certain items were expressly excluded, including “change order or extra work,” which would be handled separately. The total contract price was $266,817.31 including tax, payable in four staged instalments: 30% at signing; 30% during the work at a time to be agreed; 25% when 60% of the work was complete; and the final 15% upon full completion. This structure effectively required 85% of the price to be paid once 60% of the work had been done, with only 15% held back until the end. In addition to the Main contract, several written contracts and invoices later documented extra work: a first package of “extra work #1” (plumbing, draining, electrical and floor items); a separate contract for installing a heat pump; a contract for new windows and exterior doors; a contract for a French drain, sump pump and related work; a contract for brick repointing and window sealing; and further invoices for miscellaneous work, interior doors, tree removal and additional plumbing.

Course of the renovation and payment dispute

Work on the triplex ran from February to August 2018. Shortly after signing, Mr. Riahi returned to Iran for six months, leaving day-to-day dealings with the contractor to Ms. Khaleghi. Their relationship, initially friendly, deteriorated over time. Ms. Khaleghi testified that Mr. Sam became insulting and aggressive, limited her access to the site, insisted she not speak directly to his workers, demanded increasing and unexpected payments, and refused to assemble an Ikea vanity she had selected. She also believed that Mr. Sam was being overpaid relative to the progress of the work and for a period held back a cheque, releasing it only in mid-June, after which she said very little work was done. Mr. Sam, in contrast, said delays were caused by the defendants’ constant changes of mind and slow decision-making, particularly over finish choices and extra work such as the heating system, windows and the French drain. He initially accompanied Ms. Khaleghi to suppliers out of family goodwill but testified that this became too time-consuming. Crucially, he stated that the owners refused to follow the agreed payment schedule, insisting the project be fully completed before making further payments, which led him to leave the site at the end of August 2018. On 14 August 2018 the contractor sent a demand letter for the remaining balance under the Main contract and extras. On 22 August 2018 the owners, through counsel, responded with a list of alleged deficiencies and a deadline to correct them, failing which they would hire another contractor and claim their costs. Settlement discussions failed and litigation ensued, with the contractor suing for unpaid invoices and loss of revenue, and the owners filing a cross-demand for completion and corrective costs, loss of rent, moral damages and punitive damages.

Key contractual and evidentiary issues

A central issue was how much work under the Main contract had been completed and whether the corresponding staged payments were due. Although they disputed the overall percentage finished, the owners effectively acknowledged that 60% of the work had been completed by August 2018, which triggered the third contractual instalment. They had paid a total of $210,000 toward the Main contract, including two $10,000 cash payments, covering the first two instalments in full and part of the third. This left an unpaid balance of $16,794.71 on the third instalment. The defendants argued that because they were not fluent in English, inexperienced in construction and had relied on Mr. Sam as family, the Main contract should be viewed with caution. The Court held that they had received the contract days before signing, that it was explained to them in Farsi, and that they had ample opportunity to seek advice from relatives and professionals, including a sister and brother-in-law who were real-estate brokers and a niece who was an architect. They had not been pressured and bore responsibility for signing without further consultation. Another major evidentiary question concerned alleged cash payments for extras, especially “extra work #1” and the French drain. The owners claimed they had remitted nearly $80,000 in cash to Mr. Sam, including $20,000 already acknowledged plus additional sums. They relied largely on Mr. Sam’s brief handwritten notes, which they treated as receipts. The contractor maintained that those notes either referred to cash already accounted for (for example, in a detailed receipt on company letterhead for Main contract payments) or to earlier $5,000 French drain payments he conceded, not to the additional amounts the owners asserted. The Court closely examined the various handwritten notes, formal receipts and bank documents, ultimately finding that the defendants had not proven the disputed extra cash payments and that the more precise, dated notes and formal receipts from Mr. Sam were more reliable.

Court’s assessment of delays, alleged deficiencies and expert evidence

The homeowners also alleged that Mr. Sam had promised to finish by early July 2018 and that his failure to do so, combined with deficient work, justified their refusal to pay further amounts and underpinned their claims for completion costs and lost rent. The Main contract itself did not contain a completion date. Mr. Sam testified that the timing was left flexible because the parties anticipated substantial extras but had not yet defined their full scope; extra work such as changing the heating system or installing a French drain would inevitably affect scheduling. Having heard both sides, the Court concluded that the main causes of delay were the volume of extras and the time the owners took in making decisions, not any wrongful conduct by the contractor. The judge found Mr. Sam’s testimony detailed, consistent and supported by his admissions regarding some incomplete items, which enhanced his credibility. By contrast, Ms. Khaleghi’s and Mr. Riahi’s evidence was found to be less reliable, somewhat rehearsed and at times exaggerated, particularly as to alleged aggression and trauma. As to workmanship, the owners relied on a deficiency report prepared by architect Taraneh Khaleghi, their niece, who inspected the property in September 2018 and issued a report in May 2019. She raised concerns, among other things, about fire separation and fire-resistance ratings around the basement, alleged inadequate shower slopes and waterproofing, missing guardrails, imperfect sanding of wood floors, and some tiling and paint issues. She interpreted the Quebec Construction Code to treat the basement as a separate, significantly altered unit subject to more stringent standards. However, she acknowledged that if the basement was not rented out separately, it could be viewed as part of the ground floor, in which case the fire-separation criticism would not apply. Mr. Sam testified that he had not been told the basement would be rented and insisted he had used mold-resistant drywall and waterproofing membranes in bathrooms and checked shower slopes before tiling. The Court declined to rely on the expert’s conclusions. Reasons included her dependence on assumptions about basement use that were not proven; her failure to speak with the contractor; the poor quality black-and-white copies of her photographs; her inability to recall whether she had inspected all bathrooms; and the lack of evidence that any of the alleged deficiencies had manifested in actual problems or had been corrected. Other complaints were either outside the contractual scope (for example, balcony guardrails) or concerned minor matters such as a basement storage-closet ceramic job the contractor had done without charge using leftover tiles. Overall, the Court held that the defendants had not carried their burden of proving that the contractor’s work was generally deficient.

Outcome on the contractor’s claims for unpaid invoices and loss of revenue

On the Main contract, the Court held that the outstanding balance of $16,794.71 on the third instalment was payable, given the admitted progress level and the contractual payment structure. For extra work, the Court analysed each contract and invoice. It found that the contractor had been paid in full for the heat pump and for windows and exterior doors, but not for “extra work #1” and the French drain. The owners’ alleged additional cash payments for those items were not proven, so the Court awarded the claimed $17,690.05 for extra work #1 and $7,594 for the French drain balance, including certain tax components. It also granted the contractor’s claims for taxes on brickwork and tree removal and for miscellaneous “change order and extra work #2” and “extra work #3” relating mainly to interior doors, concluding these were genuine extras not folded into the Main contract and that discounts shown on invoices corroborated that they had been negotiated. One invoice, “extra work #4” for plumbing in the furnace room and basement bathroom, was disallowed because there was no prior agreement and the owners credibly denied authorising it in advance. In total, the Court allowed unpaid extra-work invoices amounting to $45,318.28, leading to an overall allowed claim for unpaid contract and extra work of $62,112.99. The contractor also sought $127,916 for loss of profits, alleging he had lost a lucrative Ontario renovation contract scheduled to start in August 2018 because he had to remain in Montreal to try to finish the defendants’ project. Evidence from the Ontario client showed that the project could still have proceeded in September, but Mr. Sam only followed up in October, by which time the opportunity had passed. In any event, he claimed the full contract price without evidence of costs, so he failed to prove actual lost profit. The Court therefore dismissed the loss-of-revenue claim for lack of causation and insufficient proof of damages.

Outcome on the owners’ cross-demand

The defendants’ cross-demand sought completion and corrective work costs, materials, future plumbing corrections, lost rent, storage charges, a refund of a $25,000 cash payment, substantial moral damages and punitive damages for alleged abuse of process. Their claimed completion-work amounts were weakened by evidentiary gaps: a contract with another contractor was unsigned and unsupported by proof of payment; invoices did not clearly identify what work was done or where; and much of the claimed work and materials related to items that were part of the 15% of the Main contract that both sides agreed remained unfinished when the contractor left. The Court reasoned that because this portion of work corresponded to the unpaid final 15% of the Main contract, the owners could not claim its full replacement cost on top of withholding payment. Some specific proven completion costs, however, were recognised. The owners proved that they had to pay another company to complete certain duct work, grill installations and a digital thermostat that formed part of the fully paid heat-pump contract. They also proved the cost of installing a sump pump in the furnace room that should have been done under the French drain contract and invoice. These two items totalled $3,352.96, which the Court allowed. Claims for additional electrical work, kitchen cabinetry and other items were dismissed as insufficiently linked to the contractor’s obligations or to defective performance. The Court also rejected the owners’ claim for $18,404.15 in materials, holding that these were finishing items (cabinets, countertops, backsplash, sinks, faucets and spotlights) they had always been responsible for under the Main contract and which likewise related largely to the 15% of work left undone when payments were withheld. The estimated $13,400 for future plumbing corrections failed because there was no proof the work had ever been carried out. Loss-of-rental-income claims also failed; the Court found the contractor was not legally responsible for the delays, and there was no evidence of actual tenancies, comparable market rents or the timeframe within which the units could in fact have been rented. Miscellaneous claims for storage fees, travel costs and reimbursement of an alleged $25,000 cash payment were dismissed for lack of legal and factual foundation. The Court found the emotional-distress and punitive-damages claims unsupported. While acknowledging that major renovations are inherently stressful, it concluded that Mr. Sam’s conduct had not been shown to be wrongful or abusive. Assertions that Ms. Khaleghi had suffered “trauma” and lasting effects were not backed by objective medical evidence, and the judge found her testimony about fear and aggression overstated and inconsistent with her active participation in later negotiations.

Final ruling and monetary outcome

By the end of its analysis the Court concluded that the contractor had substantially performed the Main contract and agreed extras, and that the owners’ unjustified refusal to follow the payment schedule led him to leave the project with about 15% of the work unfinished. It granted his claim for unpaid Main contract and extra-work invoices totalling $62,112.99, while also recognising, through judicial compensation (set-off), that the owners were entitled to $3,352.96 for specific completion work they had to commission from others. After set-off, the Court ordered the defendants, Ms. Khaleghi and Mr. Riahi, to pay the plaintiff company a net sum of $58,760.03, together with legal interest and the additional indemnity under article 1619 of the Civil Code of Québec from the date the action was filed, plus taxable judicial costs whose exact dollar value was not fixed in the judgment. In practical terms, 6148018 Canada Inc. (Acadian Construction and Renovation) emerged as the successful party, obtaining a monetary award of $58,760.03 plus interest, indemnity and costs in recognition of its largely successful enforcement of the renovation contracts.