Executive Summary: Key Legal and Evidentiary Issues

• Particularization and quantification of the defendant’s $300,000 counterclaim for breach of contract and negligent misrepresentation were found insufficient and had to be answered through undertakings and refusals.
• The defendant’s $1,000,000 claim for negligent interference with economic relations, loss of profit, loss of opportunity and “other damages” lacked allocation and supporting particulars across projects and causes of action, and fuller quantification was ordered.
• Discovery obligations regarding damages were enforced, with the court confirming that questions on damage quantification at examination for discovery are proper and must be answered rather than deferred to trial.
• The plaintiff’s documentary production and “best efforts” searches for supporting records (including proof of payment and project documents) were accepted as sufficient, illustrating the standard for “genuine and substantial search” on undertakings.
• The court distinguished circumstances where bank statements or further financial records must be produced, finding no specific undertaking here and treating existing invoices and confirmations of payment as adequate proof.
• Costs of the competing motions were awarded to the plaintiff, reflecting its success on its own motion for answers and in resisting the defendant’s motion, with a fixed all-inclusive costs order of $5,000 payable by the defendant.

Background and parties

The dispute arises out of three construction projects where a plumbing and mechanical contractor alleges wrongful termination and unpaid amounts, and the general contractor responds with a substantial counterclaim. The plaintiff, The Original Plumbing Co. Inc., carries on business as a provider of plumbing and heating services, while the defendant, Anacond Contracting Inc., is a construction contractor and sub-contractor. The litigation is proceeding in the Ontario Superior Court of Justice before Associate Justice B. McAfee.

Facts and contractual relationship

According to the pleadings, the plaintiff and defendant entered into contracts in the fall of 2017 and winter of 2018 for plumbing, heating, ventilation and air-conditioning work on three separate projects: the Kortright Visitor’s Centre Renovation Project, the Cummer Community Centre Project, and the Scarborough Animal Hospital Project. The plaintiff was retained by the defendant to perform mechanical and HVAC-related work at each site, in its capacity as a specialized subcontractor.

The relationship deteriorated when the defendant terminated the plaintiff’s involvement in connection with these projects. Following the termination, the plaintiff commenced an action on April 30, 2019, seeking damages totaling $235,358.88 for breach of contract and unjust enrichment, plus $50,000 in punitive damages and other relief. The core of the plaintiff’s case is that it performed work and supplied materials that were not fully paid and that the termination and non-payment constituted a breach of their contractual arrangements and unjustly enriched the defendant.

In response, the defendant served a statement of defence and counterclaim on or about June 5, 2019, advancing a sizeable counterclaim of $1,350,000. The defendant alleges that the plaintiff’s conduct and performance caused it to suffer losses, including through alleged breach of contract, negligent representation, and other economic torts. The plaintiff filed a reply and defence to counterclaim dated July 29, 2019, disputing those allegations.

Nature of the motions before the court

The decision in question is not a trial judgment on liability or damages, but an interlocutory ruling on discovery motions. Each party brought a motion dealing with answers to undertakings and refusals arising from examinations for discovery. The plaintiff sought to compel better answers from the defendant in respect of its large damages claims in the counterclaim, while the defendant sought to compel further production and documentation from the plaintiff, particularly regarding payments and project-specific records.

On the plaintiff’s motion, the issues were narrowed to one outstanding undertaking and one outstanding refusal stemming from the examination for discovery of the defendant’s representative, A. Fallone, held on July 16, 2021. The plaintiff requested answers to undertaking no. 27 and refusal no. 13, as recorded in the parties’ Form 37C chart.

On the defendant’s motion, the remaining issues concerned five undertakings directed to the plaintiff, arising from the examination for discovery of the plaintiff’s representative, A. Lipiec, held on July 15, 2021. The undertakings in dispute were nos. 8, 9, 23, 26 and 35, again as described in the same Form 37C chart.

Issues regarding the defendant’s damages claims

A central focus of the plaintiff’s motion was the adequacy of the defendant’s particularization and quantification of its counterclaim damages. In paragraph 67(i) of the statement of defence and counterclaim, the defendant claims $300,000 “for breach of contract and negligent representation.” Through undertaking no. 27, the defendant had agreed during discovery to provide particulars of this $300,000 figure. In a later response dated July 22, 2024, the defendant advised that it attributed $150,000 to breach of contract and $150,000 to negligent representation.

The court found that this response did not meaningfully particularize the damages claim. Simply splitting the total into two equal halves by cause of action did not explain what specific losses made up each amount, how those amounts were calculated, or which of the three projects the losses related to. Because those necessary details were missing, the court held that the undertaking remained outstanding and ordered that it be fully answered.

Refusal no. 13 related to paragraph 67(i) and (ii) of the statement of defence and counterclaim. The plaintiff had asked discovery questions seeking quantification particulars of these damages claims. The defendant refused, stating that the particulars were already contained in the pleading. However, the court emphasized that questions about damages are relevant and that a party is entitled to know the damages sought against it at the discovery stage, not only at trial. The endorsement referred to existing authorities confirming that damage-related questions must be answered in discovery, and noted that if such questions could not be asked at discoveries, it is unclear when they could be asked in the litigation process.

The court then examined paragraph 67(ii) of the counterclaim, in which the defendant claims a single figure of $1,000,000 “for negligent interference with economic relations, loss of profit, loss of opportunity, delay and other damages to be determined prior to or at Trial of the matter herein.” The pleading did not allocate this $1,000,000 among the various alleged causes of action or types of loss, did not identify what was meant by “other damages,” and did not identify which of the three projects any particular heads of loss related to or how each loss was calculated. Furthermore, in several related paragraphs (including paragraphs 73, 75, 76 and 86), the defendant pleaded that full particulars would be provided prior to trial, and in other places (such as paragraphs 77, 85 and 89), the pleading referred back to the same heads of damages without providing detailed quantification.

The court found that asserting that the particulars had already been pleaded was inconsistent with the express reservation that full particulars would only be provided later, and inconsistent with the defendant’s obligation during discovery to provide sufficient detail about its damages. As such, refusal no. 13 was held to be improper, and the court ordered that this refusal be answered with the necessary quantification particulars for both the $300,000 and $1,000,000 claims.

Issues regarding the plaintiff’s undertakings and documentary production

On the defendant’s motion, the remaining issues concerned whether the plaintiff had properly complied with its own undertakings arising from its examination for discovery. Undertakings nos. 8 and 9 dealt with proof of payments made in relation to the Scarborough Animal Hospital project. For undertaking no. 8, the plaintiff was to make best efforts to provide proof of payment for duct cleaning completed by DDK at the animal hospital. For undertaking no. 9, the plaintiff was to make best efforts to provide proof of payments to Mits Air Conditioning and DDK for materials and services supplied to that project.

The plaintiff subsequently produced an invoice from DDK marked “paid,” as well as an email from DDK attaching screenshots showing payment and a zero balance owing. For Mits Air Conditioning, the plaintiff produced a copy of the invoice marked by that company as paid by certified cheque. The court accepted that these materials met the undertakings, distinguishing the present situation from a prior case cited by the defendant where specific undertakings had been given to produce bank statements. In this matter, no specific undertaking to produce bank statements had been requested or given, and the court found that the provided invoices and confirmations sufficed to show payment.

The remaining undertakings—nos. 23, 26 and 35—raised the question of what constitutes “best efforts” in searching for and producing documents. Undertaking no. 23 required the plaintiff to provide all supporting documents regarding the time and value the plaintiff placed on installing the air conditioner and moving the condenser at the animal hospital. Undertaking no. 26 required copies of any and all documents indicating that replacement parts were supplied for damaged equipment mentioned in an email found in the plaintiff’s affidavit of documents. Undertaking no. 35 required the plaintiff to review its records and provide an updated bill of sale reflecting the non-delivery of six fans to the animal hospital.

The plaintiff explained, through the affidavit of its representative, that only two individuals—Mr. Lipiec and Faina Konarzhevska—had access to the company’s physical and electronic records. They conducted a comprehensive search of relevant physical records at the plaintiff’s office, at Mr. Lipiec’s home, and in storage, as well as electronic records in both Mr. Lipiec’s personal email and the company’s general email account. Despite this search, they were unable to locate any additional supporting documentation concerning those specific work items or equipment issues.

Relying on prior authority that defines “best efforts” as requiring a “genuine and substantial search,” the court held that the plaintiff had satisfied its obligations. Since there were no further responsive records within its possession, power or control, the court ruled that undertakings nos. 23, 26 and 35 had been properly answered. The defendant might have follow-up questions arising from the answers, but it was not entitled to compel non-existent documents or to insist on further searches beyond what the law regards as best efforts.

Procedural history of the motions and costs outcome

The procedural background to the motions also influenced the costs outcome. The plaintiff initially requisitioned a long motion dealing both with answers to undertakings and refusals and with a status hearing and extension of the set-down date. The defendant then indicated it would bring a cross-motion for its own undertakings and refusals. Several case conferences were held before the associate justice, at the parties’ request, to narrow the issues and to deal with timing and scheduling. Ultimately, the parties agreed on an order extending the set-down date, recorded in an earlier endorsement, and the court directed that each side bear its own costs of those case conferences in light of the overall circumstances.

On the motions themselves, the plaintiff succeeded in obtaining the relief it sought on the remaining disputed questions on its own motion and also succeeded in opposing the relief remaining at issue on the defendant’s motion. In other words, on the outstanding points argued in this endorsement, the plaintiff was the successful party. Taking into account all relevant circumstances, the court fixed a lump-sum, all-inclusive costs award of $5,000 for the combined motions. That amount was ordered payable by the defendant, Anacond Contracting Inc., to the plaintiff, The Original Plumbing Co. Inc., within 30 days.

Overall outcome and successful party

This decision represents an interlocutory victory for the plaintiff in the discovery phase of a construction and commercial dispute. The court enforced the defendant’s obligation to properly particularize and quantify its substantial counterclaim damages, compelling detailed answers to an outstanding undertaking and a refusal concerning both the $300,000 breach of contract and negligent representation claim and the $1,000,000 economic tort and loss-of-profits claim. At the same time, the court accepted that the plaintiff had met its own discovery obligations by providing documentary proof of payments and conducting a genuine and substantial search for project records, thereby discharging its “best efforts” undertakings. As a result, the plaintiff, The Original Plumbing Co. Inc., emerged as the successful party on these competing motions, and the court ordered the defendant, Anacond Contracting Inc., to pay a total all-inclusive sum of $5,000 in costs in favor of the plaintiff, with no trial damages yet determined in this endorsement and no other monetary awards quantified beyond that costs order.