In Sjostrom Sheet Metal Ltd. v. Geo A. Kelson Company Limited, 2023 ONSC 4959, the Ontario Superior Court of Justice affirmed several key legal principles, including the importance of carefully drafted pleadings, the validity of oral contracts, the significance of good record-keeping in quantifying damages, adherence to contractual default notice provisions, and the consequences that may flow from ambiguous or incomplete change orders.
This matter involved two actions arising out of a construction project whereby University Health Network (“UHN”) hired Canadian Turner Construction Company Ltd. (“Turner”) as the general contractor to build the UHN Centre for Cell & Vector Production (“CCVP”) in Toronto. Turner subcontracted with Geo A. Kelson Company Limited (“Kelson”) for the mechanical scope of work. Kelson further subcontracted with A. Amar and associates Ltd. (“Amar”) to perform certain sheet metal work. Amar hired labourers from Sjostrom Sheet Metal Ltd. (“Sjostrom”) to assist with completion of certain sheet metal work.
Sjostrom abandoned the project when Amar stopped paying. Kelson contacted Sjostrom and asked them to return to site to complete the remaining sheet metal work, making direct payments to Sjostrom. Kelson issued a change order reducing Amar’s subcontract price.
Sjostrom liened and commenced an action for amounts it claimed it was owed by Kelson. Kelson took the position that it did not have a contract with Sjostrom and was therefore not liable for the amounts claimed. Instead, Amar was required to pay Sjostrom for any amounts owing. Kelson counterclaimed against Amar for damages, and for contribution and indemnity, in the event it was liable to Sjostrom in the action.
In its decision, the Court considered the following:
- The alleged agreement between Sjostrom and Kelson;
- The amounts claimed by Sjostrom;
- The impact of a change order on Amar’s scope of work; and
- The alleged breach of the subcontract between Kelson and Amar.
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