Executive Summary: Key Legal and Evidentiary Issues

• Disputed oral contracts for architectural services across three projects (St. Thomas, Mississauga Heights, and Wareham Drive), including challenges to the validity and compromise of specific invoices.
• Establishment of a statutory trust under s. 8 of the Construction Act and breach of trust by the corporate defendants and their directing mind due to failure to account for construction financing used to pay trades.
• Personal liability of Imran Ahmed arising both from his role as directing mind for breach of trust and from an oral promise to pay for the Wareham Drive drawings.
• Allegations of deficiencies, delay, and misuse of drawings by the defendants, contrasted with the absence of documentary proof of deficiencies and the court’s acceptance that the plaintiff completed the contracted work.
• A substantial counterclaim for misrepresentation, reputational harm, and delay-related financing costs, ultimately dismissed for lack of evidentiary support and causation.
• Quantification of the plaintiff’s recovery by adjusting several invoices and confirming partial payment, resulting in a net monetary judgment while leaving the exact amount of costs to be determined separately.

Factual background and parties

This dispute arose from a series of oral agreements for architectural design services between 2493572 Ontario Inc., operated by architectural technologist Peter Del Grosso, and entities associated with Imran Ahmed under the “Diamond Luxury” banner. The work related primarily to the St. Thomas subdivision project, plus a Mississauga Heights project and a custom home at Wareham Drive. The parties never reduced their arrangements to a fully executed written contract. While one draft contract referenced the “Diamond Group of Companies,” it was unsigned, though Mr. Ahmed conceded that its terms accurately reflected the agreement for the St. Thomas work. Invoices were variously addressed to Diamond Luxury Developments (“DLD”) and Imran Ahmed personally, with payments being made from the account of Diamond Luxury Developments Corp. (“DLD Corp.”). Diamond Luxury Builders Inc. (“DLB”) held legal title to the St. Thomas lands and received construction financing from Morrison Financial Mortgage Corporation, which funds were then advanced to DLD Corp. for payment of trades on the project. The business operations, including dealings with the plaintiff, were conducted through DLD Corp., with Mr. Ahmed exercising full control.

Projects and scope of the architectural services

The plaintiff’s work spanned three projects. For the St. Thomas development, the plaintiff was engaged to design plans for six custom homes, which would serve as templates for a further 24 lots. The agreed fee was $3.00 per square foot for each model type, covering preliminary sketches, final drawings, site/grading plan, floor plans, foundation/basement plan, wall sections, elevations, decks, and walkouts. Fees for permits and HVAC layouts were excluded and to be billed separately. Payment was structured as 10% on retainer, 40% upon approval of preliminary sketches and completion of working drawings, and the balance once permits were issued. For Mississauga Heights, the plaintiff prepared drawings, invoiced the work, and later accepted a reduced payment after the project did not proceed to permitting. For Wareham Drive, a custom luxury home project for a contact of Mr. Ahmed, the plaintiff relied exclusively on Mr. Ahmed as point of contact. Mr. Ahmed instructed the plaintiff by email to proceed with working drawings at a flat fee of $6,000 for all drawings, including HVAC, and no contact was made directly with the owner of the property.

Invoices issued and payment disputes

Several key invoices framed the litigation. For Wareham Drive, Invoice #200 in the amount of $8,192.52 was addressed to DLD and Mr. Ahmed. The court accepted that Mr. Ahmed had orally promised payment, that he was the sole conduit between the plaintiff and the project, and that the account remained unpaid. However, because he had specified a $6,000 flat fee for all drawings, the court revised the amount of this invoice to $6,000 plus HST, payable by Mr. Ahmed personally. For Mississauga Heights, Invoice #201 totaled $9,040. The plaintiff acknowledged receiving $6,000, and its own accounting records recorded the invoice as paid in full. Mr. Ahmed testified that a compromise had been reached to reduce the invoice to $6,000 because the project did not progress to permitting. Given the plaintiff’s receipt indicating full payment and the absence of contrary evidence, the court found Invoice #201 fully satisfied, with no balance outstanding. The largest billing dispute concerned St. Thomas. The initial retainer invoice (Invoice #174) for $6,000 was almost fully paid, leaving a small balance of $1,130, which was later carried into a subsequent invoice. Invoice #209 of October 13, 2022 sparked further dispute. Following negotiations, the invoice was amended to reflect the 40% stage payments contemplated by the parties’ agreed terms. Both Mr. Del Grosso and Mr. Ahmed signed the revised invoice, and the amount, including the balance from Invoice #174, was paid. Later, the plaintiff issued Invoice #217 dated February 12, 2023, directed only to DLD Corp. It captured the outstanding 60% for certain plans and additional charges beyond the original $3 per square foot arrangement, for a total of $28,147.62 including HST, offset by a prior $3,000 payment, leaving $25,147.62. Although Mr. Ahmed questioned the invoice’s format and timing, the court accepted it as a valid invoice reflecting the actual work completed, save for a $3,750 plus HST line item for five site visits that had never been contractually agreed. A further invoice, #221 dated March 20, 2023, sought payment for 35% of the cost of preliminary drawings for Plan G-SP. Again, Mr. Ahmed tried to impugn its validity due to its proximity to litigation, but did not dispute the underlying work. The court accepted Invoice #221 as a legitimate charge for completed services.

Delay, withholding of drawings, and competing narratives

As tensions escalated over non-payment, the plaintiff refused to release final drawings for St. Thomas until it received what it considered the full amounts due on earlier stages. Complicating matters, the plaintiff was also owed money from Mr. Ahmed’s brother on another project and attempted to leverage both debts together, insisting on payment before providing Phase 2 drawings. While the agreed structure had been payment after final drawings and issuance of permits, there was no assurance from Mr. Ahmed that outstanding balances would ever be paid, and he maintained that prior 40% payments fully discharged the obligations, even characterizing a $3,000 payment as gratuitous. The stand-off led Mr. Ahmed to retain a different design firm to complete final drawings based on the plaintiff’s existing work. Minor changes were made without the plaintiff’s knowledge or consent, and the revised drawings were then submitted to the City of St. Thomas. The defendants led no evidence contradicting the plaintiff’s assertion that only modest modifications were made, meaning the new designer largely built on the plaintiff’s original plans. The plaintiff, for its part, admitted to withholding final drawings but justified its conduct as a response to chronic non-payment and prior negative experience with Mr. Ahmed’s business circle.

Breach of trust and Construction Act issues

A central legal issue concerned whether construction financing advanced by Morrison to DLB for the St. Thomas project was impressed with a trust under the Construction Act. It was admitted that Morrison advanced funds to DLB, which were then transferred to DLD Corp. for payment of trades. The plaintiff had provided services for the project and remained unpaid in full. On these facts, the court held that the statutory requirements under s. 8 of the Construction Act were met, so that monies received from Morrison were trust funds for the benefit of those supplying services and materials to the improvement. The defendants, as trustees, bore the burden of showing that trust funds were disbursed properly to pay trades rather than being diverted. They produced no accounting or banking records to demonstrate compliance. As a result, both DLB and DLD Corp. were found liable for breach of trust. Moreover, as director and officer of DLD Corp. and sole director of DLB, Mr. Ahmed was personally liable under the Act for the breach of trust by the corporate defendants. In contrast, the Wareham Drive work did not involve any funds advanced to DLD Corp. or DLB for that project. The court found no basis for a Construction Act trust claim in relation to that invoice. Mr. Ahmed’s liability there arose from his personal oral promise, not from any statutory trust.

Counterclaim for misrepresentation, reputational harm, and financing losses

DLD Corp. pursued a significant counterclaim, originally quantified at over $1.2 million but capped at $200,000 due to the simplified procedure limit. The counterclaim alleged that Mr. Del Grosso had made willful or negligent misrepresentations to the City of St. Thomas and to trades, and that his conduct led to project delays, increased financing costs, and reputational harm. In response to a request for particulars, the defendants asserted that the plaintiff contacted the City to express concerns about liability for changes made to his drawings without his knowledge and told tradespeople that he had not been paid and that they would likewise not be paid. The court found no independent evidence corroborating negligent or willful misrepresentation. The statement that the plaintiff had not been paid was true; therefore, it could not constitute a misrepresentation. As for the contact with the City, the plaintiff acknowledged advising officials that he had not approved changes to his drawings and would not assume liability for any resulting deficiencies. The court concluded that this communication was appropriate, especially given that the defendants had silently shifted to another designer using his work. Any anxiety or inspection delay caused at the City’s end was, in the judge’s view, attributable to the defendants’ own handling of the transition rather than any malicious or false statement by the plaintiff. DLD Corp. also sought to recover amounts paid to the replacement designer, totaling roughly $22,392.49. However, it provided no clear evidence of the scope or necessity of the new designer’s work and did not show that the charges were reasonable in the circumstances. In the absence of proof that the plaintiff’s conduct made those costs necessary, the court refused to shift that burden to the plaintiff. Likewise, the claim for renewal fees and additional interest charged by Morrison was undermined by the evidence of David Morrison, who testified credibly to multiple causes of delay, including Tarion registration issues and a deep downturn in the real estate market. The court was not satisfied that the plaintiff’s withholding of drawings was the sole or predominant cause of the financing losses, and DLD Corp. could not meet its burden of proof.

Absence of insurance policy terms or coverage issues

The decision is rooted in construction, contract, and trust principles and does not involve the interpretation of an insurance policy or specific policy wording. While the case discusses construction financing, bank commitments, and Tarion warranty registration, there is no separate discussion of insurance clauses, coverage grants, exclusions, or policy conditions. Accordingly, no insurance policy terms were at issue or construed by the court in reaching its conclusions.

Findings on liability and quantum, and overall outcome

Drawing together the evidence, the court held that the plaintiff had performed the contracted work on the three projects, subject only to the disputed site visit charges, and that it was owed payment for its professional services. For Wareham Drive, the court found that Mr. Ahmed personally contracted on the oral promise of a $6,000 all-in fee, and remained liable for that amount plus HST. For Mississauga Heights, the plaintiff’s own accounting records and the parties’ conduct demonstrated that Invoice #201 had been compromised and fully paid at $6,000, leaving no balance owing. For the St. Thomas project, the court validated invoices #217 and #221 as proper charges for completed work, but disallowed the unagreed site-visit fees of $3,750 plus HST. The total amount owing across all unpaid invoices was calculated at $29,710.38, plus HST of $3,862.35, resulting in a judgment of $33,572.73 in favour of the plaintiff. Liability for the St. Thomas-related invoices (#217 and #221) rests jointly and severally on DLB, DLD Corp., and Imran Ahmed, grounded in both breach of contract and breach of the statutory trust, while Mr. Ahmed alone is responsible for the Wareham Drive invoice (#200). The defendants’ counterclaim was dismissed in its entirety for lack of proof of misrepresentation, deficiency, or causation of the claimed financing and reputational losses. Although the plaintiff was largely successful, the judge noted that the recovery fell within Small Claims Court jurisdiction and directed that the quantum of costs be determined later through written submissions. As a result, the successful party is 2493572 Ontario Inc., with a fixed monetary award of $33,572.73, while any additional amount for costs remains to be set by the court in a subsequent costs decision.