SUPERIOR COURT OF JUSTICE
Judgment On Motions For Summary Judgment
COURT FILE NO.: CV-16-0223-A; CV-16-0248-A DATE: 2018-10-12
B E T W E E N:
THE FLOOR SHOW LTD A. Verheaghe, for the Plaintiff Plaintiff
- and –
MAN-SHIELD (NWO) CONTRUCTION INC. R. Johansen, for the Defendant Defendant
-and-
2363267 ONTARIO INC. and ALLURE CONDOMINIUMS LP Not appearing Third Party
A N D B E T W E E N :
THE FLOOR SHOW LTD A. Verheaghe, for the Plaintiff Plaintiff
- and -
MAN-SHIELD (NWO) CONTRUCTION INC. R. Johansen, for the Defendant Defendant
-and-
2363268 ONTARIO INC. and AURORA CONDOMINIUMS LP Not appearing Third Party
HEARD: May 25, 2018; July 27, 2018 and September 5, 2018
BEFORE: Mr. Justice F. B. Fitzpatrick
[1] The plaintiff, The Floor Show Ltd. (“TFS”), brings motions for summary judgment in two actions it has commenced against the defendant Man-Shield (NWO) Construction Inc. (“MS”). The third parties in these matters did not take part in these motions.
[2] This is a construction case. TFS is a supplier and installer of flooring materials, tile, hardwood floors, and carpets. It had two fixed price contracts with MS for supply and installation of flooring materials for two high-end residential condominium projects on the waterfront in Thunder Bay. One project was called “Aurora,” the other “Allure.” Overall, the construction did not proceed according to plan. In September 2015, MS was “fired” from the project by 2363268 Ontario Inc. and Aurora Condominiums LP, the third parties in this action (the “Owners”). MS is now involved in a protracted commercial arbitration with the Owners. The arbitration has taken far longer than counsel for MS expected. The Owners assert a significant delay and deficiencies claim against MS in the arbitration. The existence of those claims form a good part of MS’s defence to these motions.
[3] There is no issue that MS is liable to TFS for some amounts owning in respect of the construction services and materials supplied for both condo projects. The dispute is over the quantum. Also, MS asserts a counterclaim and a right to set off for delay and for damages resulting from work MS says it was required to complete in order to protect and repair the flooring TFS installed. TFS takes the position that this counterclaim was only asserted to buttress the MS defence in the arbitration and is without merit.
[4] TFS did not lien the project. This is a breach of contract action. During submissions it became apparent there are many key facts about which there was no dispute. Based on the evidence and the submissions of the parties I find these facts as follows for each of the respective projects.
Undisputed Facts for the Allure Project
[5] The parties agree the base contract price was $542,419.20 plus HST. The parties agree the contract was modified to add the supply and installation of soundproofing materials to the condo units in the amount of $35,000.00.
[6] The parties agree that MS has paid $545,072.61 to TFS in respect of the base contract for the Allure project.
[7] The parties agree that there were additional upgrades to the materials that were to be supplied to individual condo owners which were arranged directly between the owners of the condo units and TFS. Payment for these upgrades would flow through the Owners of the project to MS and then to TFS. MS says the quantum of these upgrades was $305,000.00. TFS claims these upgrades were worth $380,604.56 plus HST. However, the parties agree MS has paid TFS $175,000.00 already in respect of these upgrades.
[8] The parties agree there were extras to the contract. Certain extras are agreed. TFS was to be paid $15,750 for the installation of slim tech panels. Also, TFS was to be paid $4,500 for the installation of a fireplace in a common area of the condo.
[9] The parties agree TFS was to be paid $25,491.05 in respect of extra invoice CG404517.
[10] The parties agree TFS was to be paid $24,409.07 in respect of extra invoice CG500692.
Undisputed Facts for the Aurora Project
[11] The parties agree the base contract price was $545,804.35.20 plus HST. The parties agree the contract was modified to add the supply and installation of soundproofing materials to the condo units in the amount of $35,000.00.
[12] The parties agree that MS has paid $236,163.98 to TFS in respect of the contract for the Aurora project.
[13] The parties agree that there were additional upgrades to the materials that were to be supplied to individual condo owners which were arranged directly between the owners of the condo units and TFS. Payment for these upgrades would flow through the Owners of the project to MS and then to TFS. MS says the quantum of these upgrades was $226,358.67. TFS claims these upgrades were worth $315,132.25 plus HST.
[14] The parties agree that certain other specific upgrades have been paid. The Owner paid $15,750.00 for slim tech panels and $4,500.00 for the installation of a fireplace in the common area of the building directly to TFS.
[15] In the case of this project the parties do not agree about the quantum of the extras to the contract.
The Legal Framework
[16] The parties agreed about the basic principles applicable to motions for summary judgment. A relatively recent decision from Warkentin R.S.J., Gravelle v. Denis Grigoras Law Office, 2017 ONSC 3012, 280 A.C.W.S. (3d) 394, affirmed by the Ontario Court of Appeal in Gravelle (CodePro Manufacturing) v. Denis Grigoras Law Office, 2018 ONCA 396, 291 A.C.W.S. (3d) 174, summarizes the state of the law regarding summary judgment motions following the leading decision of the Supreme Court of Canada in Hyrniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87 as follows, at paras. 19-22:
19 A court must grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence (Rules of Civil Procedure, RRO 1990, Reg 194, r 20.04(2)(a); Hryniak v Mauldin, 2014 SCC 7, at para. 47 [Hryniak]).
20 There is no genuine issue requiring a trial where the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. When the process allows the judge to make the necessary findings of fact, to apply the law to those facts, and it is a proportionate, more expeditious and less expensive means to achieve a just result, summary judgment is the appropriate remedy (Hryniak, at para. 49).
21 In determining whether or not there is no genuine issue requiring a trial, a court shall consider the evidence presented by the parties on the summary judgment motion. A judge may also weigh evidence, evaluate the credibility of a deponent and draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at trial (Rules of Civil Procedure, r 20.04(2.1); Hryniak, at para. 52).
22 In determining whether to apply Rule 20.04(2.1), the judge should determine whether a full appreciation of the evidence and issues required to make a dispositive finding can be achieved by way of summary judgment, without a trial. The evidence need not be equivalent to that expected at trial, but the judge must be confident that the dispute can be resolved fairly (Hryniak, at paras. 53, 57).
[17] I adopt the reasons of Warkentin R.S.J. in considering this motion.
Positions of the parties
TFS
[18] TFS argues there is no genuine issue for trial for both the Aurora and the Allure projects. TFS did the contract work in a good and workmanlike manner. The materials supplied were not deficient. The value of the work is clear from the invoices submitted. MS had no problem with the work and materials supplied at the time the invoices were submitted. After the fact, when the overall relationship between the Owner and MS broke down, MS used this breakdown to stop paying a number of sub-trades, including TFS. TFS submits that the MS counterclaim is spurious and without merit. TFS argues that the evidence of Peter Belluz on behalf of MS is not credible. This is because he swore statutory declarations that are patently false. The statutory declarations depose that monies had been paid to sub-trades, which in fact, had not been done at the time the statutory declarations were made. TFS submits the court can determine on the evidence that Mr. Belluz has made false statements. Making a false statutory declaration is a serious matter and goes to the credibility of other evidence tendered about the project by Mr. Belluz.
[19] TFS submits it should be granted summary judgment for all amounts it is claiming for both statements of claim it has issued against MS for the Allure and Aurora projects.
MS
[20] MS argues that there are many genuine issues for trial. MS points to significant disputes as to the value of the work. MS argues it has a legitimate counterclaim which requires trial to resolve and that the counterclaim has a number of significant elements.
[21] MS argues that it has a legitimate delay claim against TFS. MS also claims a back-charge against TFS for floor protection and clean up MS was required to complete as a result of TFS’s failure to do so over the course of the ongoing project. MS claims TFS or its sub-trades damaged floors, which required MS forces to complete repairs. The counterclaim and the main claim are so inextricably wound together that judgment cannot realistically be granted in one without consideration of the other.
[22] In addition, MS relies on a “pay when paid” clause in both contracts. As MS has not been paid by the Owner, it can rely on this clause to avoid paying TFS at this time. Payment from the Owner will not be resolved until the arbitration is completed. MS also argues that to grant judgment of the TFS claim would create a risk of inconsistent results from a decision of this court and the arbitrator conducting the proceeding between MS and the Owners. This arbitration proceeding also includes warranty claims against MS, which MS asserts should have been done by TFS. MS does concede that neither it nor TFS were offered any opportunity to complete such warranty work, although it is admitted TFS did repair work for the completion contractor who worked on the projects after MS was fired.
[23] For all these reasons, MS asserts that it would be unfair to grant summary judgment of TFS’s claim and that the motions should be dismissed.
Disposition of the Motions
[24] The hearing of this motion occurred over several days. In the end, counsel for MS provided useful documents which were in the nature of a Scott Schedule for both projects. I have used these documents as a kind of road map for this decision. As noted above, MS clearly admits something is owing to TFS. However, MS argues that it would be unfair and incorrect in law to grant judgment to TFS for any amount at this time given the significant claim MS is facing from the Owners. MS argues that the Owners’ claim impacts the quantum owed to TFS.
[25] I reject MS’s argument on this point, and I am prepared to grant partial summary judgment for certain amounts which I find MS owes to TFS now for the following reasons.
[26] In my view, I am able to reach a fair and just determination of this matter on the merits based on the materials before the court. I find on the material before me I can make the necessary findings of fact, apply the law to those facts, and grant judgment on some of the claims asserted, which is a proportionate, more expeditious, and less expensive means of achieving a just result in the two matters that are before the court.
[27] The way I see it, the quantum MS owes to TFS for both contracts at issue is straight forward. The matters in dispute are relatively minor given the amounts at issue. I do not view the counterclaim as so inextricably related to the main claim that judgment should be delayed. In the main, I find that the counterclaim is without merit based on the evidence I have before me and for reasons which I will set out below. However, TFS has not expressly asked for the counterclaims to be dismissed. A trial may occur in the future for the counterclaim. I find it would not be just to delay judgment now because of the possibility of a trial for this counterclaim sometime in future.
[28] The quantum TFS claims in each statement of claim in turn has several aspects. The parties have recognized this and have divided their submissions into those focused on the base contract, the upgrades, and the extras to the contract. This is consistent with how I would expect counsel to approach a construction case such as this at trial. In my experience, construction work is capable of being compartmentalized when it comes to an analysis of quantum necessary for dispute resolution purposes. The issues raised on this motion are sufficiently discrete that I can find there is no genuine issue for trial on all issues save and except for the issues of upgrades on the Aurora project and for some of the extras on the Allure project. For those discrete issues, I find there is a genuine issue for trial and the only issue specific to those matters is quantum. Rule 20.04(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides I can direct a trial only in respect of those particular amounts.
[29] I am mindful of the timing of these motions. TFS has been waiting a long time to be paid for its work. I find the objections to judgment and the counterclaim that MS has asserted are largely spurious. I believe they are designed to delay the process rather than to assert meritorious positions. In my view, the summary judgment process should be one that allows expeditious resolution of civil matters. Clearly, the Allure and Aurora projects have become a legal quagmire, mostly for MS. However, after a reasonable period of time, patience wears thin. If there are legitimate claims for which there is no genuine issue for trial, judgment should be granted. If there are legitimate defences or counterclaims they should proceed to trial. In this matter, it is simply the case that I do not see the MS counterclaims as sufficiently legitimate that they should serve to bar TFS from judgment on the majority of its claims now.
Interest
[30] To begin, TFS asserts a substantial amount for prejudgment interest in both claims. In my view, the quantum for this item claimed by TFS is not sustainable. This is because there was no provision for the payment of interest in the contract documents between the parties. An affiant for TFS, Ms. Schille states in her affidavit of June 12, 2017, that interest was to be charged at the rate of 2% per month, compounded monthly. This interest charge did appear on the progress invoices provided to MS. However, MS did not agree to this contractual term. A specific rate of interest did not appear in the contract.
[31] In the decision Nortrax Canada Inc. v. Atlantis Marine Construction Inc., 2010 ONSC 4097, 191 A.C.W.S. (3d) 1153, Lauwers J. (as he then was) stated, at para. 30:
30 In my view, therefore, the general principle applies, as expressed by the Saskatchewan Court of Appeal in Prince Albert Co-Operative Association, supra, that there needs to be agreement to pay interest for a customer to be liable for a contractual rate of interest, and there is none here.
[32] TFS is entitled to prejudgment interest on any amount awarded pursuant to s. 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43. There is therefore no genuine issue for trial in respect of TFS’s claim for interest except for prejudgment interest in accordance with s. 128 of the Courts of Justice Act. I am ordering prejudgment interest at the rate of 1.0% be awarded to TFS. MS was “fired” in September 2015. TFS sent its last invoices at the end of September 2015. The prejudgment interest rate according to s. 127 of the Courts of Justice Act for the fourth quarter of 2015 was 1.0%. The statements of claim in this matter were issued in May 2016. I am exercising my discretion to find that prejudgment interest shall be calculated as of January 1, 2016, at the rate of 1.0% on amounts I find to be properly due and owing to TFS as set out below.
Base Contract
[33] The next issue is the quantum owed for the base contracts. For both contracts, the parties agree on the amount of the base contract and that there was an addition of $35,000.00 to each contract for sound proofing. The parties agree how much MS paid TFS for both base contracts plus the soundproofing.
[34] The base contract price for Aurora was $545,804.35 plus HST plus $35,000.00 for soundproofing. MS paid $236,163.98 in respect of this contract. There is no genuine issue for trial on this discrete issue. Therefore, I find that with respect to the base price for the Aurora contract, MS owes TFS $344,640.37 plus HST.
[35] The base contract price for Allure was $542,419.20 plus $35,000.00 for soundproofing. MS paid $545,072.61 in respect of this contract. There is no genuine issue for trial on this discrete issue. Therefore, I find that with respect to the base price for the Allure contract, MS owes TFS $32,346.59 plus HST.
Upgrades
[36] The parties agree that certain upgrades to the flooring of various units requested by the individual owners formed part of the contract. In fact, most of the units received an upgrade from carpet, which was originally specified, to hardwood.
Allure
[37] For the Allure project, the parties agree MS paid TFS the sum of $175,000 in respect of upgrades to the various units. They differ on the quantum of the value of the upgrade work. TFS claims the work was worth $380,604.56 plus HST. MS says that it agreed to only $305,000.00 plus HST for upgrades.
[38] There was agreement between the parties that the profit from the upgrades would be shared between the Owner, MS, and TFS. However, with the ultimate breakdown in the relationship between MS and the Owners, this was never resolved and remains an issue in the arbitration.
[39] Despite this, in my view, I can make a determination about this discrete issue because of the evidence that was put before me on this motion. Email exchanges between the parties were put before the court in respect of this issue. In particular, an email of October 23, 2015, from a representative of TFS to a representative of MS was instructive. In it, TFS made what appears to be an offer to compromise its upgrade claim in return for a global settlement. It offered to compromise its upgrade claim to $315,100.28 plus HST. Counsel for TFS did not object to this email being entered. MS responded to that email on October 23, 2015, by suggesting the upgrades should be valued at $315,000.00 less $12,300.00 paid.
[40] However, a further email from the same TFS representative, sent to MS on October 26, 2015, was placed before the court. In that email, TFS withdrew its offer of agreeing to the upgrades at $315,100.28 and further stated, “We remain in disagreement on the amount payable for Upgrades-We contend that the amount should not be $305,043.35 (+HST) but it should be $329,857.03 (+HST).”
[41] It was telling that the email was not tendered by TFS in its material. It came in by way of the reply affidavit tendered by MS. In my view, this email contains a written admission by TFS as to the proper value of the upgrades. I find therefore that the value of the upgrades completed on the Allure project is $329,857.03 plus HST. This would include any amounts for profit sharing by TFS. I find that the evidence of TFS will not improve on this issue if the matter is allowed to continue to trial. Therefore, there is no genuine issue for trial as to the quantum of the upgrades on the Allure project.
[42] The parties agree that MS paid $175,000.00 towards upgrades on the Allure project. Accordingly, I find that MS owes TFS $154,857.03 plus HST for the upgrades on the Allure contract.
Aurora
[43] For the Aurora project, TFS claims $315,132.25 plus HST for upgrades. MS says that it agreed to only $226,358.67 for upgrades. The parties agreed nothing was paid for the upgrades for the Aurora project. Of the amount claimed, MS admits it owes $4,500.00 for a fireplace added to a common area, like the one added to the Allure project.
[44] Counsel for the parties candidly admitted they and their clients have not had any discussions on this particular issue, as was done for the Allure project. According to MS, the quantum that TFS can expect from MS on this particular item was composed of two components: first, the value of the work done; and second, the value of the profit generated from the various upgrades.
[45] This profit sharing concept was not adequately addressed by TFS in its material. The parties are approximately $89,000.00 apart on the value of this work, exclusive of HST.
[46] In my view there, is a genuine issue for trial as to the quantum of the upgrades, but not as to whether or not an amount is owing. This matter will proceed to trial subject to directions I will give at the conclusion of these reasons. There is no genuine issue for trial with respect to the claim for the fireplace upgrade. An amount of $4,500.00 plus HST will be added to the judgment granted to TFS accordingly.
Extras
[47] The parties acknowledge there were “extras” to the contracts at issue. This is not uncommon in construction projects. As matters evolve, additional work is required and sometimes work is both added and deducted. Typically a contractor will issue a written change order to a sub-trade when this occurs. Occasionally changes are done “on the fly” and verbal instructions are given. The contracts between the parties contained a standard “Changes to the Work” provision at Article 5 of the subcontract conditions. This required a written order from MS to TFS if any extra work was to be added to the contract.
Allure
[48] TFS invoiced MS a total of $195,571.03 for what it called “extras” on the base contract for the Allure project. TFS agreed in oral submissions that its invoice CG404613 related to soundproofing but was originally considered by them as an extra. It has already been accounted for in my finding regarding the base contract above. There is no genuine issue for trial in respect of the claim for soundproofing for the Allure project. Accordingly, zero will be found to be owing in respect of this particular invoice.
[49] MS agreed in oral argument that TFS invoice CG404517 was for all properly approved extras. Accordingly, I find that MS owes TFS the sum of $25,491.05 inclusive of HST in respect of this particular invoice.
[50] TFS invoiced MS $34,717.20 for extras for suites 1301, 1402, 1407, 1308, 1505, 1702, 2101, 2602, 3201, 2408, 2503, and 2603 on invoice CG500692. MS argued that the total for all these particular extras should be $24,409.07. In oral argument, counsel for TFS agreed with this amount. Accordingly, I find that MS owes TFS the sum of $24,409.07 inclusive of HST in respect of this particular invoice.
[51] TFS invoiced MS $8,441.38 for extra/repairs to suites 1101, 1204, 1301, 1401, 1403, 1603, and 1608 on invoice CG500288. Counsel for MS says that the evidence submitted by both parties show that only $4,470.25 worth of work was actually approved by MS for these particular suites. The approved work was for suites 1101, 1204, and 1301. I agree. The evidence of the affiants for TFS did not convince me that the work on this invoice for suites 1401, 1403, 1603, and 1608 was approved in writing or otherwise by MS. This approval is required, is standard practice for construction work, and was contemplated by the parties in their written contract. Accordingly, I find that MS owes TFS the sum of $4,470.25 inclusive of HST in respect of this invoice.
[52] The MS “Scott Schedule” dealt with amounts claimed in invoice CG402465-L as an “extra.” However, the affidavit evidence of the affiant for TFS categorized this invoice as consisting of both upgrades (of $66,648.17) and extras (of $53,471.40). Adding these two amounts together totals $120,119.50 which is the face amount of the invoice. However, on the copy of the invoice exhibited to the affidavit filed by TFS, there are handwritten notations which appear to reduce the amount of the invoice. The reduced upgrade amount is $58,980.68 and the reduced the extras amount is $47,319.92. Counsel for MS admits that extras in the form of a fireplace worth $4,500 and Slimtech panels worth $15,750, both inclusive of HST, were approved.
[53] There is therefore a dispute about an extra for heated glass valued at $10,500.00 and “cbl app upgrades” in the amount of $16,569.82. On the evidence, I cannot decide if these were expressly approved or not. There is therefore a genuine issue for trial with respect to the quantum of these two extras for the Allure condominium. However, there is no dispute about payment of the other two extras on this invoice. There is therefore no genuine issue for trial regarding those amounts. Accordingly, I find MS owes TFS the sum of $20,250 inclusive of HST for the fireplace and Slimtech panels in respect of this particular invoice.
[54] The TFS affiant listed three invoices in respect of a claim for “extras” for the Aurora contract. These invoices were CG 404896-H for $11,865, CG404896-J for $5,085.00, and CG503743 for $25,285.49. In the MS Scott Schedule, the claim for extras for Aurora is listed as being contained on invoice CG404613 in the amount of $23,376.54. This actual invoice was contained in the TFS affidavit related to the Allure project. It was an invoice for $73,450.00 and says, “extra to contract for sound proofing.” I find therefore that the Scott Schedule submitted by MS was in error at least in respect of the issue for extras for Aurora.
[55] In summary, the amounts awarded to TFS for extras relating to the Allure project are as follows: invoice CG404517 in the amount of $25,491.05 inclusive of HST; invoice CG500692 in the amount of $24,409.07 inclusive of HST; invoice CG500288 in the amount of $4,470.25 inclusive of HST; and invoice CG402465-L in the amount of $20,250.00 inclusive of HST for the fireplace and Slimtech panels. As a result, the total amount for extras relating to the Allure project is $74,620.37 inclusive of HST.
Aurora
[56] Also, a review of the invoices submitted by TFS for “extras” for the Aurora project all deal with “upgrades” as opposed to extras.
[57] I have dealt with the claim for upgrades for the Aurora project previously in this judgment. In bringing this motion, TFS is representing to the court it is putting its best foot forward. The court’s expectation is that the evidence will not get any better if the matter is allowed to proceed to trial. In my view, TFS has not proven that it has any outstanding claims for extras for the Aurora project. Therefore, based on the evidence and submissions of both parties, I find there is no genuine issue for trial regarding TFS’s claim for amounts owed by MS for extras related to the Aurora project. This particular claim is set at zero.
Summary
[58] In summary, I find that TFS is entitled to partial summary judgment against MS for the following amounts:
| Allure | Aurora | |
|---|---|---|
| Base contract | $32,346.59 + HST | $344,640.37 + HST. |
| Upgrades | $154,857.03 + HST | $4,500.00 + HST |
| Extras | $74,702.35 | $0.00 |
| Total | $187,203.62 + HST + $74,620.37 | $349,140.37 + HST |
[59] To clarify, the total amount owing for the Allure project is $187,203.62 plus HST plus an additional $74,620.37 inclusive of HST for extras. The total amount owing for the Aurora project is $349,140.37 plus HST.
[60] In addition, prejudgment interest will be allowed on these total amounts at the rate of 1.0% commencing January 1, 2016.
[61] There will be a trial ordered with respect to the following issues: (1) the quantum of the TFS claim for upgrades on the Aurora project; and (2) the extras on the Allure project. Directions as to these ongoing matters will be given at the conclusion of these reasons.
The Counterclaim
[62] MS’s counterclaims in both matters contain a number of broadly drafted claims, which can be generally described as follows: first, an allegation that MS had the contractual right to withhold payment until payment is made by the Owner, a so called “pay when paid clause;” second, TFS did not complete its work either according to the terms of the contract, or in a timely way or in a good and workmanlike manner; third, MS was required to repair deficient work done by TFS; and, fourth that TFS delayed the project and MS has suffered damages. There was no express allegation of negligence made against TFS by MS in the counterclaims.
[63] In the materials filed on this motion and in argument before me, MS’s position on the counterclaims was more particularly disclosed. The counterclaims have three significant common aspects with regard to a calculation of the quantum owed to TFS: a back-charge claim for floor protection and clean-up, a back-charge claim asserted by the Owner against MS for damage to ceramic tile and flooring, and the Owner’s delay claim. MS argues it is proper for MS to “flow through” the Owner claims against TFS by way of its counterclaim.
[64] As noted previously, MS asserts that, in any event, the contract between the parties contains a “pay when paid clause,” and as MS has yet to be paid by the Owner, it should not be subject to judgment now from TFS.
[65] In addition, regarding the Aurora project, MS asserts it has a claim against TFS for floor preparation MS had to do as well as a claim for $91,856.35 for a credit the Owner may be asserting in the arbitration.
[66] I do not accept these arguments. I am still prepared to grant partial summary judgment in favour of TFS immediately, and I am not prepared to exercise my discretion to stay that judgment pursuant to r. 20.08 for the following reasons.
The Unique Aurora Counterclaims
[67] MS asserts it has a claim against TFS for floor preparation it had to do as well as a claim for $91,856.35 for a credit the Owner may be asserting in the arbitration.
[68] There is no genuine issue for trial with respect to the alleged $91,856.35 owner credit. At paragraph 26 of the affidavit of Peter Belluz dated January 18, 2018, in respect of the Aurora project, Mr. Belluz states:
there is also the potential claim for credit to the contract price by the Owner in relation to flooring provided by the Plaintiff. I do not have complete particulars at this time but estimate same at $91,856.35.
[69] This is hardly “best foot forward” evidence. I find there is no genuine issue for trial on this potential credit claim by the Owner because there are no particulars for this claim. Parties are expected to put their best evidence forward on motions such as this. Mr. Belluz’s affidavit was sworn almost two and a half years after MS forces left the job site. It is unconvincing to state that he simply does not have particulars at this time. As far as I am concerned, “no particulars” equals “no claim.”
[70] For the Aurora project, MS asserts that it was required to use its forces to prepare the concrete floors of the various units so either carpet or hardwood could be installed. It claims a charge back against TFS for $43,520.00. This is supported by an undated invoice. That invoice says a person named Milos Vackar worked 640 hours in March, April, May, June, and July 2014 grinding concrete floors to new tolerances demanded by TFS. MS points to a specification dealing with carpeting included by reference in the contract documents which provides:
3.1 Sub-Floor Treatment .1 Concrete shall be inspected to determine special care required to make it a suitable foundation for carpet. Cracks 3.0 mm wide or protrusions over .08 mm will be filled and leveled with appropriate and compatible patching compound.
[71] TFS says this is an issue between the Owner and MS. There is nothing in the specifications requiring it to grind the floors. At best, they were only to be leveled by the flooring installer. TFS has provided affidavit evidence that grinding was not within its scope of work and that it never received the invoice for grinding until it was included in the responding affidavit served by MS in January 2018. It argues the evidence is simply too vague to prove anything on a balance of probabilities.
[72] I agree that MS has failed to put its best foot forward with respect to the evidence on this particular aspect of its counterclaim. There is nothing in Mr. Belluz’s affidavit to identify who Mr. Vackar is and why it is warranted that he be paid some $68/hr ($43,520.00 divided by 640). It seems to me this type of wage suggests specialized training and not the general labour type skill set required for using a grinding machine and patching floors. Like the “Owner credit” claim, the back charge claim for floor grinding lacks particulars.
[73] Also, again doing simple math, dividing 640 hours into 5 months, it would appear that on average Mr. Vackar did 128 hours of work per month on this particular function. This is a lot of time for one worker to be spending when there is no documentation being exchanged between the parties regarding whether the work is required and why it is taking so much time. If indeed Mr. Vackar was taking this long, this suggests to me a problem with the contractor who laid the concrete floors rather than with TFS.
[74] In any event, I find that, on the evidence put forward by MS, this aspect of the counterclaim is weak and borders on spurious. I accept this invoice did not appear until two and half years after MS was removed from the site. On all the evidence related to this particular issue, it is insufficient to allow me to find that there is a genuine issue for trial, and it is insufficient to hold up granting partial summary judgment.
The Back Charges
[75] MS claims two unique heads of back charges as a substantial amount of its counterclaim for both the Allure and Aurora projects. MS claims a back charge claim for floor protection and clean up as well as a back charge claim allegedly asserted by the Owner against MS for damage to ceramic tile and flooring.
[76] The evidence in support of both these aspects of the counterclaims has a similar quality to that asserted for the unique Aurora claims. I find it is thin and unpersuasive.
[77] With respect to the Allure project, MS has tendered an undated invoice for $77,441.02. A claim for $17,270.02 worth of material is included in this invoice. Some 24 different workers are noted on the invoice. It appears they were all paid $68/hr. There is nothing in the affidavit which sets out the qualifications of these workers. There is nothing in the affidavit material which justifies this rate for what appears to be for general construction labour. TFS’s responding affidavit notes that cleaning type work is charged out at $15 to $20 an hour. There is no documentation contemporaneous to the period these people were doing the work that suggests MS would be trying to back charge TFS for it.
[78] In its responding affidavit evidence, TFS claims it never received this invoice until it was included in Mr. Belluz’s affidavit of January 2018. Further, MS never told TFS in any way that TFS was not meeting its ongoing obligations to protect the floors.
[79] With respect to the Aurora project, MS has tendered an undated invoice for $52,434.53, which included a claim for $20,433.73 worth of material. Some five different workers are noted, all of whom also worked on the Allure job. It appears they were all paid $68/hr. There is nothing in the affidavit which sets out the qualifications of these workers. There is nothing in the affidavit material which justifies this rate for what appears to be for general construction labour. There is no documentation contemporaneous to the period these people were doing the work to suggest that MS would be seeking to back charge TFS for it. There are several entries for clean-up and protection of TFS work for the period after MS was terminated from the project, being the weeks of September 19, 26 and October 3, 2015. Apparently, MS was served a trespass notice. The fact that they are claiming a back charge against TFS for this period strains credulity.
[80] In its responding affidavit evidence, TFS claims it never received this invoice until it was included in Mr. Belluz’s affidavit of January 2018. Further, MS was never told TFS in any way that TFS was not meeting its ongoing obligations to protect the floors.
[81] I accept TFS’s argument that the cleaning and floor protection aspects of MS’s counterclaims lack merit. The claims are vague. They do not convince me there is actually a genuine issue for trial in respect of these back charge claims. The claims appear to be something that MS has cobbled together in an attempt to delay TFS from obtaining judgment. Counsel for MS points out that TFS did not specifically request the counterclaim be dismissed. However, on the evidence before me on these motions, I am not convinced that the presence of a counterclaim on this particular aspect of the project is sufficient to delay TFS from obtaining partial summary judgment now.
The Owner Damage Claim/Warranty Work
[82] MS claims it is facing back charges of $80,014.86 for Allure and $155,195.74 from the Owner. MS alleges the latter amount is for repairs completed by contractor Pomerleau Construction required because of inadequate work done by TFS. Pomerleau completed the work after MS was barred from the job in September 2015. TFS actually remained on the job after MS was barred and did some work for Pomerleau. TFS received no written notice of these claims now asserted by MS.
[83] I find that the evidence given by MS on this motion is insufficient to convince me that the MS claim on this matter is a genuine issue or at least sufficient to allow MS to have partial summary judgment stayed. The entire quantum of the work at issue came to light well after MS had left the job. At the time, TFS had completed its work. The contract at paragraph 18.1 gave MS the right to correct TFS defective work. It provided:
If the Subcontractor should neglect to perform the work properly or fail to perform any provisions contained in the subcontract documents, Man-Shield may give the subcontractor written notice specifying such default and if such default continues for two (2) working days, Man-Shield, without prejudice to any other right or remedy it may have, may make good such deficiencies and deduct the cost thereof from the payment otherwise due to the subcontractor or may terminate this subcontract, and may, for the purpose of completing the work, take possession of all materials tools and equipment, upon the premises, and may either complete this subcontract itself or employ any other person, firm or corporation to do so, charging all costs incurred to the subcontractor with right of set-off of any costs against any amount otherwise due to the subcontractor.
[84] It is clear from this provision that written notice and the opportunity for TFS to correct the deficiency are conditions precedent to MS being able to do the repairs itself, deduct the cost from the amounts owed to TFS, and claim a set off.
[85] In my view, because MS did not give TFS written notice of the alleged deficiencies, and MS never gave TFS the opportunity to remedy the alleged deficiencies, there is no contractual basis for MS to claim this amount against TFS. Accordingly, I find no genuine issue for trial regarding the Owner’s claim for damage and warranty work set out in MS’s counterclaim.
Pay When Paid
[86] MS relies on the following language, which appears in both the Allure and Aurora subcontracts, as a basis for staying TFS’s the partial summary judgment:
Part 1- Invoicing and Payment B. Payments shall be made monthly on progress estimates as approved by Man-Shield covering 90% of the value of the Work completed by the Subcontractor for the previous month; such payments to be made within 30 days from the date of the original invoice or 10 days after Man-Shield receives payment for such work from the Owner, whichever is later.
[87] The fact the Owner has not paid MS in full for its contracts is well known. As such, MS argues TFS must wait for the resolution of the arbitration and the ultimate payment by the Owner before TFS can be in a position to seek payment from MS.
[88] TFS resists this argument and in turn relies on the next subparagraph in the contracts relating to these two projects. Those paragraphs state:
C. Payment of the subcontractor’s holdback invoice/balance owing under this Subcontract shall be made within 10 days after payment has been received by Man-Shield, or within a reasonable period of time after total performance or termination of the Prime Contract, or stoppage of the Project, whichever is earlier
[89] The term “Prime Contract” is defined earlier in the contract as the agreement between the Owner and MS for the entire project.
[90] TFS notes that the contracts were drafted by MS. To the extent the operation of these two paragraphs creates any ambiguities, TFS submits the contracts should be construed against MS as the authors of the contracts.
[91] I prefer the position taken by TFS on this discrete issue.
[92] I find that, taken together, the two paragraphs mean that indeed payments to the subcontractors are contingent on payments made by the Owner, except until such time as the project is stopped or MS is terminated from the job. In this case, it is uncontroverted that MS was terminated from the job in September 2015. In my view, the provisions of paragraph C specifically address the facts in this matter. The parties turned their minds to the express issue we have here, namely payment in the event MS is terminated from the project. That termination in fact occurred. MS was then required to pay its sub-trades despite being in a contest with the Owners for payment for the project. This was a risk MS foresaw and took by including paragraph C in the contract. I agree that any ambiguities in the contract should be construed against MS as the contract’s authors. However, the provisions are not ambiguous as I read them. They are quite unambiguous and provide for the exact situation that has occurred here.
[93] Also, it seems to me, given that three years have now passed since MS was put off the project, MS cannot rely strictly on the “pay when paid” provision of part B of the contract alone. At some point, it becomes incumbent on a general contractor to pay sub-trades for work that is not disputed. I find that that time has now come for the particular contracts at issue. In my view, there is no genuine issue for trial as to the operation of the “pay when paid” clauses in the contracts at issue between the parties. The contracts contemplated payment in full to TFS for the balance owing on its invoices upon termination of the Prime Contract. The Prime Contract was terminated by the Owners in September 2015 when the Owners obtained a trespass notice barring MS and its employees from the Allure and Aurora sites. There being no genuine issue for trial, there is no a reason to delay granting TFS partial summary judgment on these motions.
The Delay Claim
[94] In oral argument, counsel for MS candidly admitted there is no evidence put forward by his client as to a delay claim for the Aurora project. Therefore, there is no genuine issue for trial on this particular aspect of the counterclaim.
[95] The focus of the argument on this aspect of the counterclaim related solely to the Allure project.
[96] Counsel for MS also candidly admitted that this delay claim has been solely initiated by the Owner. It is being vigorously pursued and defended in the arbitration process. MS is defending on the basis that there was no delay caused on either building by either it or any of its sub-trades. Counsel admitted if no finding is made for delay in the arbitration, it will not be proceeding against TFS for a delay claim in its counterclaim. However it is reserving its right to flow any finding the arbitrator may make in this regard through to TFS.
[97] To my mind this argument is a classic attempt to “have your cake and eat it too.” I appreciate counsel’s candor. However, it does not persuade me that judgment against TFS should be delayed. A great deal of effort was spent on the alleged delay claim by the parties during this motion. In the main, it was a waste of time given the reality that this is an Owner driven claim that is being disputed and both parties on this motion take the position that it is a claim without merit.
[98] Delay claims in construction are complex. They are fact driven. They require evidence that forces could not be deployed elsewhere in mitigation of any possible delay in order to found a claim for damages. Generally, the party seeking damages must give notice of the delay to the other party.
[99] In this case, there was a good deal of evidence about problems with the schedule for Allure. There was a construction schedule attached to the contract filed on this motion. In his affidavit, Mr. Belluz deposes that TFS did not complete its work by the original deadline of November 3, 2014. In response, the affiant for TFS say other sub-trades delayed their start, and in turn, TFS was being called upon to do its work out of turn from the line up provided in the contract. This lead to an undue amount of damage to the flooring as other trades were coming in after the flooring had been laid.
[100] Also, TFS did eventually get its work done and had all but two suites done by late December. The email evidence suggests this was an important time for the Owners as they wanted to get as many people in to the units as possible. Without a doubt, there is a good deal of evidence about this point if indeed MS pursues its claim. Yet, there is no evidence of how this delay actually caused MS any damages in terms of its forces being idle and unproductive solely because of the actions or inactions of TFS. I find that there is great uncertainty as to whether MS is going to pursue this delay claim against TFS. I therefore find that there is no genuine issue for trial regarding this aspect of the counterclaim such that judgment for TFS should be delayed.
Credibility of the MS Evidence on This Motion
[101] I accept counsel for TFS’s argument that overall the evidence given on this motion by MS is not credible. I do so for a number of reasons. The first relates to evidence which was given about statutory declarations signed in relation to these projects.
The Statutory Declarations
[102] Three statutory declarations were put to Mr. Belluz on cross-examination, which occurred on March 21, 2018. Counsel for MS objected to these documents being introduced. Counsel claimed, “There’s no fresh evidence going in here,” and refused to answer questions outside the scope of the affidavit. In my view, this was an improper refusal particularly as it was made during a cross-examination. The scope of cross-examination is not defined solely by an affiant’s own affidavit. It is limited by matters relevant to the matters at issue. Mr. Belluz could not avoid answering difficult questions because he decided not to include a relevant document in his main affidavit.
[103] In my view, the content of a statutory declaration goes to the credibility of the declarant. The statutory declarations here also speak to the state of accounts between the parties on this motion at the time they were sworn. They are important because they are sworn documents. Two of the statutory declarations put to Mr. Belluz on cross-examination were documents sworn by Mr. Belluz himself. They speak to payments received by MS during construction and to monies that Mr. Belluz deposed flowed to sub-trades during a period when accounts from TFS were outstanding. The evidence on this motion was that, at least for one sub-trade, TFS, monies did not in fact flow as Mr. Belluz swore to in the statutory declarations.
[104] I do not accept counsel for MS’s argument that the statutory declarations were “qualified” in that the funds referred to were either payments deferred by agreement or were the subject of legitimate dispute. Payments to TFS were not deferred by agreement. I find that the “pay when paid” clause referred to previously expressly calls upon MS to pay its sub-trades within 10 days after it has received funds from the Owner. The statutory declarations at issue refer to MS being paid progress draws by the Owner at a time when invoices for TFS were outstanding.
[105] Also, the statutory declarations were sworn February 28, 2015, April 30, 2015, and May 31, 2015, and MS has put no evidence before the court on this motion that, as at those dates, it had any problems with or legitimate disputes about paying TFS’s ongoing invoices. The evidence of any disputes is all after the fact, as for example the undated back charge invoices for floor protection. In addition, there is no written evidence of MS telling TFS that TFS had to do something that it was contractually obligated to do (protect the floors) and that MS was going to assert a back charge against TFS if TSF did not meet this contractual obligation.
[106] There is no question there was correspondence going back and forth between the parties about delays in the project as of the fall of 2014 and into the spring and summer of 2015. However, there is no evidence that MS was unequivocally saying to TFS that they were not going to be paid for their work or that their work was somehow so deficient it would be absolutely subject to a back-charge.
[107] Mr. Belluz’s statutory declaration with respect to the Allure 51 Unit Condominium of April 30, 2015, is instructive. It is an important basis for my finding that his evidence is not credible. The statutory declaration confirms the last progress payment for which MS received payment was January 31, 2015. The declaration itself sets out that with three separate exceptions, none of which I find apply, “all accounts for construction services incurred directly by MS have been paid.” In my view, that would cover accounts rendered by TFS to MS for work performed on the Allure project. However, as of April 30, 2015, there were two large accounts for upgrades from TFS to MS which were outstanding. They were CG402465-J dated November 19, 2014, for $107,794.35 and CG402465-L dated December 25, 2014, for $66,648.17. The total for both invoices was $174,442.52. There were also three smaller invoices for upgrades rendered in February 2015 totaling $5,296.56.
[108] There were also invoices for extras outstanding or which had only been partially paid. One, invoice CG404613 for $73,450, has been subsequently identified as being for soundproofing and is more properly identified as being part of the main contract. However, I have found that a portion of the main contract for Allure remained unpaid as of April 20, 2015, and ongoing. Also, $16,765.92 was paid on invoice CG402465-L, dated December 25, 2014, and totally $53,471.40, leaving $36,705.48 outstanding. As well, invoice CG404517 dated January 21, 2015, for $25,491.05 was unpaid.
[109] I find that, as of April 20, 2015, MS owed at least $236,639.05 to TFS for four separate large invoices for upgrades and extras as part of the Allure project.
[110] I can appreciate how a statutory declarant on a large project such as the Allure job could overlook $5,296.25 in upgrade invoices. However, amounts outstanding north of $200,000.00 are another matter. The large amounts owing for extras and upgrades are substantial, material, and call in to question Mr. Belluz’s credibility in that he swore an affidavit that was patently untrue to the tune of at least $236,639.05.
[111] Therefore, with respect to credibility, I accept counsel for TFS’s arguments that, in the main, the evidence put forward by MS is not credible and does not represent them putting their best foot forward on these motions. First, I find that the affiant for MS, Peter Belluz, has sworn an untrue statutory declaration in respect of work done on one of the projects at issue at a time material to the outstanding amounts sought by TFS on these motions. This colours my perception of all the other evidence he has given on this motion. It is one thing for him to have provided emails between the parties in support of statements in his evidence about the state of affairs between the parties. I have relied on some of that evidence to find that indeed TFS’s claim for upgrades on Allure was reduced in a way that allows me to grant judgment for an amount that is less than claimed by TFS. I did that because those email documents speak for themselves.
[112] However, Mr. Belluz makes a number of statements in his affidavits about the validity of the MS counterclaim that I find lack credibility. These are the bald statements about the Owner’s claim for Aurora, the general lack of particulars for the set off and counterclaim amounts for floor protection and Owner damage claims, and his evidence about the delay claim in the face of counsel’s submissions that those very claims are being defended by MS in the arbitration. All of these statements cause me to question his credibility. I therefore discount all of that evidence. I do so, not only because of the deficient statutory declaration, but because I find that the quantum of the counterclaim asserted by MS appears to be inflated, did not comply with the terms of the contract, and does not appear on an objective basis to be reasonable. In my view, that further reduces the credibility of the MS evidence tendered on this motion.
Conclusion
[113] I find that, on the evidence on this motion, there is no genuine issue for trial for the majority of the amounts claimed by TFS against MS in TFS’s two statements of claim. I find that there are genuine issues for trial on the issues of:
- An extra for heated glass valued at $10,500, and “cbl app upgrades” in the amount of $16,569.82 for the Allure project; and
- The quantum, but not the liability of MS, on the issue of upgrades for the Aurora project.
[114] I do not find that there are any genuine issues for trial with respect to MS’s counterclaim. However, TFS has not sought to have the counterclaims dismissed. I am not prepared to stay the partial summary judgment despite the fact that the counterclaims remained technically alive.
[115] If MS wishes to proceed with its counterclaim in this matter or, if TFS wants to schedule a trial of the issues for which I have found there are genuine issues for trial, either party shall first schedule a case conference before Fitzpatrick J. This case conference shall address a procedural order governing the exchange of documents, the timing of discoveries, the timing of a pretrial, and ultimately the number of witnesses that may be called and the method evidence may be given for either the counterclaim and/or the main trial of the remaining issues from the statements of claim. I anticipate, given what counsel has stated about the progress of the arbitration, it would be most cost efficient and just to await the complete conclusion of the arbitration and any appeals therefrom before the case conference for the counterclaim or the trial is to be scheduled. In any event, as I am case managing these matters, I am always open to convening a case conference at any time if the parties consent and progress on resolution of these files can be pursued.
Costs
[116] Subject to any Rule 49 compliant offers to settle, which would have an impact on my discretion to award costs, I would be inclined to award costs to TFS on a partial indemnity basis. I have the costs outlines from both parties. If the parties cannot be agree to costs within 10 business days of release of these reasons, the parties shall make further written submissions on the issue of costs. TFS shall make a submission of no more than 3 pages on or before 20 business days following release of these reasons. MS may make its responding submission on or before 25 business days following release of these reasons. TFS shall not have a right of reply.
[117] For all the reasons above, order to go as follows:
- The Floor Show Ltd. is granted partial summary judgment in file CV-16-0223-A (Allure) against Man-Shield (NWO) Construction Inc. in the amount of $187,203.62 plus HST plus an additional $74,620.37 inclusive of HST. Prejudgment interest at the rate of 1.0% shall be calculated on this amount commencing January 1, 2016;
- The Floor Show Ltd. is granted partial summary judgment in file CV-16-0248-A (Aurora) against Man-Shield (NWO) Construction Inc. in the amount of $349,140.37 plus HST. Prejudgment interest at the rate of 1.0% shall be calculated on this amount commencing January 1, 2016;
- If the parties wish to proceed with the remaining issues for trial in the main action or the counterclaim or both, they shall first schedule a case conference before Fitzpatrick J.;
- Costs shall be payable by Man-Shield (NWO) Construction Inc. to The Floor Show Ltd. in an amount to be agreed to by the parties or fixed by the Court upon further written submissions.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
Released: October 12, 2018
