The Bonus Clause That Never Defined 'Completion'

The situation

Carlos had spent more than a decade as a police sergeant, and for the last several years he had also taken on paid evening and weekend work as a site risk and scheduling consultant for a small residential construction company based in Georgina. The arrangement suited everyone. The company got a consultant who understood project sequencing, safety compliance, and how to keep trades moving without friction. Carlos got a second income stream that used skills adjacent to, but distinct from, his police work, and his employer had signed off on the outside work as permitted secondary employment.

His written contract with the construction company, signed a little over three years before he came to Treadstone Law, set his base consulting fee plus a completion bonus of a fixed percentage on each residential development he was assigned to oversee. The bonus structure was the real incentive in the deal. Base fees were modest. The bonus payments, spread across three mid-sized developments he worked on over roughly two years, were where the meaningful money sat, and by the time all three projects were substantially built out, the bonus owing across them totalled somewhere in the neighbourhood of $620,000.

Carlos stepped back from the consulting arrangement once the third project reached what he understood to be completion, planning to collect his final bonus payments and wind the relationship down amicably. Instead, the company's owner, Nirosha, told him the bonus on all three projects was not yet payable, and might not be payable for months, because in her view none of the three developments had actually 'completed.'

Where the contract fell silent

The dispute turned on a single undefined word. The contract said Carlos earned his bonus percentage 'upon completion' of each project. It did not say what completion meant. In residential construction, that is not a small gap, because there are several different moments a reasonable person could point to and call completion, and they can be months apart.

Carlos's position was that completion meant substantial completion: the point at which units were built, inspected, and ready for occupancy, which is the milestone that matters most to a developer's cash flow and the one his day-to-day work had been aimed at achieving. Nirosha's position was that completion meant final closeout: every deficiency on every unit cleared, every holdback released, every warranty document filed, a process that in residential builds routinely drags on for months after buyers have already moved in, often driven by trades and material suppliers outside a project consultant's control.

Both readings were defensible on the words alone, which is exactly the problem with a contract that leaves a financially important term undefined. When a clause is genuinely ambiguous, courts in Ontario do not just pick a side. They look at what is sometimes called the factual matrix, meaning the surrounding circumstances known to both parties when the contract was signed, industry custom, how the parties behaved under the contract before the dispute arose, and whether one side drafted the clause and should bear the consequence of its own vagueness. Nirosha's company had drafted the contract. That mattered, but it was not automatically decisive.

There was also a timing pressure neither side could ignore. Ontario's Limitations Act, 2002 generally gives a claimant two years from when a claim is discovered to start a court proceeding, and Carlos was already more than a year past his last day of active consulting work by the time he sought advice. The clock was not yet a crisis, but it meant the file could not sit indefinitely while the two sides traded emails.

What we did

1. Reconstructed the factual matrix from Carlos's own records. Carlos had kept detailed site logs, email threads, and text messages from all three projects. We used them to show what both sides had actually treated as 'complete' in the past: on an earlier, smaller project under the same contract language, Nirosha's company had paid a bonus once units reached occupancy, well before final deficiency closeout. That prior conduct became one of the strongest pieces of evidence that occupancy, not closeout, was the parties' shared understanding of the term.
2. Sent a formal demand letter setting out the claim and the evidence behind it. Before filing anything in court, we laid out the contract interpretation argument, the supporting conduct evidence, and a calculation of the roughly $620,000 owed across the three projects, inviting a response within a set window. This served two purposes: it created a clear record of the claim for limitation purposes, and it gave the other side a real opportunity to resolve the matter without litigation costs on both sides.
3. Filed a statement of claim in the Superior Court of Justice when no adequate response came. Nirosha's initial reply offered roughly $180,000, tied to the one project where her own team's records already conceded the bonus was calculable and largely closed out. That left a substantial gap, so we commenced a formal claim to preserve Carlos's position and keep the matter moving under a court timetable rather than an open-ended negotiation.
4. Used examinations for discovery to test both interpretations against the record. Discovery is the pre-trial stage where each side questions the other under oath about the facts. It surfaced internal emails from Fernanda, the construction project manager on two of the three developments, referring to the properties as 'complete' once occupancy was granted, months before final deficiency work wrapped. That evidence strengthened Carlos's position on those two projects considerably. The third project was messier: it had unusually extensive deficiency issues, and internal records there were more mixed, which meant the risk of losing that portion of the claim outright, if the matter went to trial, was real.
5. Pursued a negotiated resolution through mediation rather than pushing to trial on every dollar. With two of three projects strongly supported by the discovery record and the third genuinely uncertain, we recommended mediation to convert that strength into a settlement rather than gambling the whole claim on a trial outcome, given how long a full trial could take and what it would cost both sides to get there.

The outcome

The matter settled at mediation, roughly ten months after the claim was filed. Nirosha's company agreed to pay Carlos approximately $390,000, close to the full amount owed on the two better-supported projects plus a partial allowance on the third, where the deficiency record made a clean win far from certain. That figure represented about 63% of the original $620,000 claim.

It was not the full recovery Carlos had hoped for going in, and we told him honestly, from the discovery stage onward, that the third project's mixed record meant a judge could reasonably have sided with the company on that portion at trial. Settling let him lock in a strong result on the parts of the claim the evidence clearly supported, avoid the cost and delay of a multi-day trial, and close out a relationship that had already ended on difficult terms. Nirosha's company, for its part, avoided the risk of a judge adopting Carlos's occupancy-based reading across all three projects, which would have cost it more than it ultimately paid.

Both sides also agreed the contract language itself was the real culprit. As part of the settlement, Nirosha's company confirmed it had since revised its standard consulting agreement to define 'completion' explicitly, tying it to a named milestone rather than a single undefined word left open to two honest but conflicting readings.

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