Executive Summary: Key Legal and Evidentiary Issues

• Whether IBL was bound to perform the structural steel work on its quoted terms, even though neither its Revised Quotation nor Manorcore's Letter of Intent was ever signed, was the central liability issue.
   
• Applying the Contract A/Contract B tendering framework from Ron Engineering and Naylor Group, the court held that Contract A formed when Manorcore bid using IBL's price, and Contract B arose when Wal-Mart accepted that bid.
   
• Neither a perceived threat of litigation nor the absence of signatures on the Revised Quotation or Letter of Intent amounted to a reasonable objection capable of releasing IBL from Contract B.
   
• IBL's failure to negotiate under the CCA1 dispute resolution provisions, incorporated into its Revised Quotation through the CISC Code, meant its objection could not be treated as reasonable.
   
• Credibility findings favoured Manorcore's senior project manager on the post-award call confirming the subcontract, while later correspondence showed IBL had no intention of proceeding after the May 23, 2018 meeting.
   
• Damages of $271,200 reflected the higher price paid to a replacement supplier; follow-up rulings set prejudgment interest at 1.5% from May 27, 2019, rejected IBL's delay argument, and fixed partial indemnity costs at $47,514.10 after reducing articling student time.
   

Facts of the case

Manorcore Group Inc. is a construction contractor, and IBL Structural Steel Limited is a structural steel supplier and installer. The two companies had no prior business relationship. On March 7, 2018, IBL sent Manorcore an unsolicited Quotation, with attached terms, offering to supply and erect structural steel for an addition to the Wal-Mart Canada Corp. store at the Pen Centre in St. Catharines for a lump sum of $596,900. After verbal discussions between the parties, that price rose to about $670,000. IBL had gathered the information for its quote independently, using the Instructions to Bidders document Wal-Mart posted to solicit bids from qualified general contractors.

Manorcore's bid included the IBL price and identified IBL as its structural steel provider. Wal-Mart awarded the contract to Manorcore on April 13, 2018. At Manorcore's request, IBL delivered a Revised Quotation on May 14, 2018; like the original, it provided for both parties' signatures, but Manorcore never signed it. One day later, Manorcore responded with a Letter of Intent, which IBL never signed.

Following a meeting on May 23, 2018, IBL indicated, and then confirmed in writing, that it would not proceed with the job. Manorcore turned to the second lowest bidder, Steelcon Fabrication Inc. ("Steelcon"), and incurred $271,200 in extra costs that Wal-Mart did not reimburse. Suing IBL for that difference, Manorcore brought the action to trial before Justice R. B. Reid of the Ontario Superior Court of Justice, heard February 4 to 6, 2026.

Policy and legislative provisions at issue

Under section 3.7.1.1 of the standard CCDC2 construction contract between Wal-Mart and Manorcore, the contractor was required to "enter into contracts or written agreements with Subcontractors and Suppliers to require them to perform their work as provided in the Contract Documents." Section 3.7.2, as amended by Supplementary Conditions, added: "The Contractor agrees to employ those Subcontractors accepted by the Owner at the signing of the Contract."

IBL's Revised Quotation stated that it was "based on the terms and condition listed in CISC CODE OF STANDARD PRACTICE FOR STRUCTURAL STEEL, unless altered above." Section 3.1 of that Code, in turn, provides that unless otherwise agreed, a contract to fabricate, deliver, and/or erect structural steel shall be the appropriate unaltered Standard Construction Document contract issued and sealed by the Canadian Construction Association. That leads to the CCA1 standard subcontract, which Appendix "A" to Manorcore's Letter of Intent also referenced. Part 8 of CCA1 gives the contractor first-instance authority to decide questions and interpret the subcontract's requirements, with unresolved disputes proceeding through negotiation, mediation and arbitration, and section 8.2.2 requires the parties to "make all reasonable efforts to resolve their dispute by amicable negotiation." Manorcore's Letter of Intent itself invited IBL, if it disagreed with the scope of work, to "contact this office to discuss same within ten (10) days of receiving the letter of intent and/or sign your acceptance in the place provided below."

Costs were governed by section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, which grants the court its discretion, and by rule 57.01 of the Rules of Civil Procedure, which lists non-exhaustive factors including success, indemnity, the amount an unsuccessful party could reasonably expect to pay, complexity, the importance of the issues, and conduct that tended to shorten or unnecessarily lengthen the proceeding. Prejudgment interest was ordered under the Courts of Justice Act [Note: the trial decision cites the statute as "R.S.O 1990 c.43," while the costs decision cites it as R.S.O. 1990, c. C.43].

Reasoning and analysis

IBL framed its defence around ordinary contract formation. In its view, the Revised Quotation was an offer that Manorcore never accepted by signing, and the Letter of Intent was a counteroffer containing new terms, which operated as a rejection. After the May 23 meeting, IBL wrote that it would not proceed because Manorcore refused to sign the Revised Quotation, IBL refused to accept the Letter of Intent, and there had been a perceived threat by Manorcore to sue if the Letter of Intent went unsigned. IBL also denied abandoning the project, as Manorcore alleged in a May 24, 2018 letter.

Manorcore relied on the law of tender. Its position was that IBL's Quotation created a binding commitment, that a contract arose when Wal-Mart accepted a bid naming IBL, and that the Revised Quotation only accounted for tariff-driven steel pricing changes that Wal-Mart permitted and that benefitted IBL alone. Manorcore further submitted that IBL discovered at the meeting that it had misunderstood the parameters of the job, resulting in an underquote, and walked away.

Justice Reid found that IBL's tender authorities pre-dated R. v. Ron Engineering & Construction (Eastern) Ltd., [1981] 1 S.C.R. 111, which created the Contract A/Contract B regime in the owner/contractor setting. In Naylor Group Inc. v. Ellis-Don Construction Ltd. (1999), 43 O.R. (3d) 325 (C.A.), the Ontario Court of Appeal extended that framework to contractors and subcontractors, holding that communication of acceptance is unnecessary and that Contract A arises once the contractor's tender, including the subcontractor's bid, is submitted to the owner and capable of acceptance. From that point, the subcontractor must maintain its bid, and the successful contractor must enter Contract B on the subcontractor's terms unless it has a reasonable objection. Reasoning that these obligations run both ways, the court held that the subcontractor is likewise bound to enter Contract B absent a reasonable objection.

Contract A formed when Manorcore bid using IBL's price and naming IBL, and Contract B came into existence when Wal-Mart accepted the bid. Although notice to IBL may not have been essential, the court accepted the evidence of Brian Weir, Manorcore's senior project manager, that he called Anil Bapat, IBL's senior project manager, to report the win, confirm Manorcore's intent to proceed with the IBL subcontract, and review scope and timing. Mr. Bapat had no recollection of that call, but acknowledged that some communication must have occurred because the Revised Quotation was requested. The CCDC2 provisions supported the operation of the regime. With Contract B already in effect, the Revised Quotation was not relevant; it reflected what appears to have been an agreement entirely in IBL's favour to adjust steel pricing, and its only other change was adoption of the Alternate Layout at a total cost of $690,000.

On whether IBL had a reasonable objection, the court noted there was no evidence of disagreement about the work before May 23, 2018. Mr. Bapat had emailed on May 15 seeking a meeting on "scope of work and schedule," and testified that he wanted to discuss differences between the two documents. According to Mr. Weir, Mr. Bapat asked how the $690,000 figure was established, and after Mr. Weir explained the alternative design cost and tariff adjustment, Mr. Bapat said IBL would not do the project because he had missed something in addendum #2. Mr. Weir's diary notes read: "IBL says they are letting the job go. Add#2 They missed steel!" Mr. Bapat denied that account and said missing steel was not discussed, while IBL's estimator, Rajan Patel, gave similar evidence and left feeling IBL had been threatened with a lawsuit, which Mr. Weir denied. Despite that conflict, subsequent correspondence showed IBL had no intention of proceeding and was relying on the unsigned Revised Quotation and the threat of court action. Neither ground, the court held, was a reasonable objection.

IBL also pointed to terms in the Letter of Intent absent from the Revised Quotation, including templates for drilling and anchor-setting to bolt steel to an existing concrete wall, a requirement to read the scope of work with Stantec's plans and specifications when IBL had quoted only from structural drawings, and a $5 million insurance certificate naming Manorcore as a named insured. Manorcore's claim that the Letter of Intent was simply more detailed was difficult to accept, the court observed, although terms forming part of the CCA1 contract might be deemed incorporated into the Revised Quotation. Citing Justice Binnie's statement in the Supreme Court's Naylor decision at para. 51 that reasonableness depends on the facts, the court found it unnecessary to decide whether these differences were significant. IBL was obliged to negotiate disputes under the CCA1 terms incorporated into its own Revised Quotation, yet it maintained its position after Manorcore wrote twice seeking an urgent meeting on the scope confusion. Where a party must negotiate a resolution and fails to do so, it cannot be said to have made a reasonable objection.

Damages followed from the replacement contract. Steelcon, engaged by a Letter of Intent on the same terms proposed to IBL, was paid $930,000 plus HST, or $1,050,900, excluding extras, compared with the Revised Quotation's $690,000 plus HST, or $779,700. IBL's argument that Wal-Mart might have reimbursed Manorcore was dismissed as speculation, given that Manorcore had entered a stipulated price contract with Wal-Mart dated April 14, 2018, based on a tender that included the IBL bid.

In its August 5, 2026 reasons (2026 ONSC 4517), the court initially set prejudgment interest at 0.5% from April 26, 2021, without submissions on rate or start date. Both parties later agreed the rate should be 1.5%. Manorcore proposed May 27, 2019, when Steelcon completed the work and the full additional cost was incurred, producing $29,278.85 at a daily rate of $11.145, or $30,061.90 on a payment-by-payment basis. IBL argued Manorcore caused five of the eight years of delay before trial and that interest should run from the final Steelcon payment, yielding three years at $4,064 per annum, or $12,192 [Note: the decision records IBL's annual figure as $4,064; 1.5% of $271,200 is $4,068]. Relying on Barbiero v. Pollack, 2024 ONCA 904, and Hryniak v. Mauldin, 2014 SCC 7, the court acknowledged a plaintiff's duty to move its action forward within a reasonable time. No specific delay could be attributed to Manorcore, however, and IBL had benefitted from the delay by not having to fund the damages, suffering no prejudice.

On costs, Manorcore sought partial indemnity costs of $43,776 plus HST and disbursements, totalling $52,287.22, while IBL accepted the partial indemnity scale but proposed $30,000 plus HST and disbursements, totalling $36,725. IBL described a straightforward matter: brief pleadings, 25 documents from Manorcore and eight from IBL, discoveries of one hour and 90 minutes, no pretrial motions, a one-hour pretrial, and a three-day trial. Although the case appeared not to be complex, IBL's failure to file its own bill of costs undercut its position on what it could reasonably have expected to pay. Counsel time was left intact. Articling student time spent on research and analysing IBL's authorities was reasonable and properly billed at a lower rate, but the student's preparation for and attendance at discovery and trial was not a justifiable cost in a relatively straightforward case, so that portion was reduced from $6,358 to $2,134 plus HST.

Ruling and overall outcome

Manorcore succeeded, with judgment against IBL for $271,200 in damages for breach of Contract B. By addendum released September 24, 2026 (2026 ONSC 5418), prejudgment interest was revised to 1.5% per year from May 27, 2019, at a daily rate of $11.145, for $29,278.85 to the date of judgment, the lower of Manorcore's two calculations. In a separate decision released September 23, 2026 (2026 ONSC 5371), costs payable by IBL to Manorcore were fixed at $47,514.10. The three decisions do not state a single combined total of damages, interest, and costs.