In this edition:

• When Construction Claims Meet the Courtroom
• Case Highlight: Airbag Manufacturing
  Facility Claim
• 5 Key Structural Mishaps in Aircraft/Spacecraft
  Hangar Retrofit Projects for Construction-
  Defect Defense Litigators

When Construction Claims Meet the Courtroom

By Stephen M. Rymal, P.E., Esq.

This is a follow-up article from the MDCAdvisor Summer 2026 Issue regarding the case of Dependable Mechanical Systems v. Ledcor Construction Limited, 2025 ONSC 5100 (CanLII).

The case involves the construction of a ten-story mixed-use condominium in Toronto, Canada. The owner contracted with Ledcor Construction Limited (Ledcor) on October 2, 2017, as the construction manager at risk on a fee-plus-cost basis. Substantial completion was scheduled for September 5, 2019, or 12 months later.

In turn, Ledcor subcontracted the mechanical work to Dependable Mechanical Systems (DMS) for the fixed price of $3,751,500.00, dated May 5, 2018. On January 2, 2020, Ledcor terminated DMS, and on January 6, Ledcor contracted with Zencorp to complete the mechanical work. The project was substantially complete on January 31, 2021.

The Court held that Ledcor proved that DMS failed to properly and diligently perform its work, thereby giving Ledcor the right to terminate the subcontract. But the Court didn’t stop there. It proceeded to examine in detail the issue of damages that Ledcor could recover from DMS to finish the work.

Ledcor submitted to the Court a detailed Schedule of Values for reimbursement.

Ledcor’s Damages Claim vs. Court Approval

Dependable Mechanical Systems v. Ledcor Construction Limited, 2025 ONSC 5100 (CanLII)

The Court’s opinion is 37 pages long, and its discussion on damages alone was half of that, so this article will focus on the important takeaways.

The largest reduction was in Item No. 1 for Replacement Costs. The Court focused on the lack of credibility of the Ledcor witnesses and whether the work to complete by Zencorp was to be performed on a fixed-price, lump-sum, or time-and-material basis. Clearly, this was a critical error on the part of Ledcor, costing them over a million dollars.

The second-largest reduction was for delay costs in Item No. 2, in the amount of $953,167.50. The Court was concerned that Ledcor’s expert did not present a Critical Path Analysis.

The Court specifically stated that “the party seeking the delay claim must through the evidence isolate and define the delay, show that the delay affected the critical path of the project, and show that the other side was at fault for the delay as opposed to being excusably delayed.”

On the other hand, DMS’s expert employed the “impacted as-planned” method to attempt to show that DMS’s delay was as much the result of forces beyond its control as it was the result of DMS’s efforts.

As a result, DMS was able to identify several issues with Ledcor’s management, including permits, forming delays, and drywall delays, sufficient enough to highlight Ledcor’s failure to meet its burden of proof.

Regarding the majority of the remaining items, the Court was able to find sufficient evidence to merit granting Ledcor the claimed costs.

There were two final findings by the Court worthy of mention.

First, under Article 10.4(b), a determination needed to be made of the unpaid balance of the amount to be paid under the Subcontract received by the Owner.

The Court performed a detailed analysis of the holdbacks on the subcontract draws or invoices and the value of outstanding change orders.

The Court specifically applied the principle of quantum meruit to include unpaid work on unpriced and uncertified but legitimate extras that should be included in the unpaid balance under the Subcontract, despite the existence of Article 6, which required written authorization for any adjustment to the Subcontract price.

The Court had no difficulty finding that the owner paid Ledcor the balance due on the Contract, so the Court subtracted the Court-Approved Backcharges from the Unpaid Balance on the Subcontract, resulting in Ledcor actually paying DMS a little over $50,000, even though DMS was properly defaulted by Ledcor.

This result only serves to emphasize the value of having an expert perform a Critical Path Analysis to support Ledcor’s Backcharges. If Ledcor had done so, then this would have reversed this result.

The second finding of interest addressed by the Court was the fact that Ledcor had default insurance and recovered the entirety of its claim against DMS, less the deductible.

DMS argued that allowing Ledcor to recover damages for completing the Subcontract would amount to unacceptable double recovery or a windfall that the law does not allow.

However, the Court relied upon a prior Supreme Court of Canada decision that said the exception is based on fairness: a wrongdoer should not benefit from the private act of forethought and sacrifice of the plaintiff in obtaining private insurance.

The Court also noted that the insurance company did not exercise its right of subrogation and that the failure to exercise that right cannot affect the defendant’s liability for damages.

Key Takeaways for Construction Professionals

The case is full of important takeaways for the construction practitioner, but the prime focus of the Court’s attention during this trial was on its reliance on expert testimony, the credibility of the experts, and the need for a Critical Path Analysis supporting a delay claim.

Airbag Manufacturing Facility Claim

MDCSystems® Case Highlight

MDCSystems® was retained to provide consulting and expert witness services in connection with a $40 million defective design and construction claim involving an airbag manufacturing facility.

Following a catastrophic failure in the portion of the plant where explosive pellets were manufactured, MDCSystems® investigated the cause of the explosion.

The investigation determined that the failure resulted from the new owner’s operation of the facility rather than defective design or construction.

Computer animation demonstrated that an aluminum scoop dropped into a mixing machine created sparks that caused an explosive deflagration, while improperly stored product contributed to the severity of the event.

The analysis also demonstrated that the facility’s blow-out panels and ventilation ducting performed as intended.

The case settled favorably for the client immediately following the release of MDCSystems®’ animated reconstruction.