CITATION: Mascia v. Tri-Star Disaster Recovery Inc., 2024 ONSC 1704

DIVISIONAL COURT FILE NO.: DC-23-228 DATE: 20240322

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Lococo, Myers, and O’Brien JJ.

BETWEEN:

ANTHONY MASCIA and LORETTA MASCIA Appellants

– and –

TRI-STAR DISASTER RECOVERY INC. Respondent

Bryan Rumble and Julien Bonniere, for the Appellants Angela Assuras, for the Respondent

HEARD at Toronto: March 19, 2024

FL Myers J.:

The Appeal

[1] Anthony Mascia appeals from the trial judgment granted by A.J. Goodman J. dated January 6, 2023.

[2] In the judgment under appeal, the trial judge:

a. ordered Anthony Mascia to pay Tri-Star Disaster Recovery Inc. $160,171.70 quantum meruit for renovation work performed on his cottage;

b. fixed prejudgment and postjudgment interest rates;

c. confirmed Tri-Star’s lien against the cottage property under the Construction Lien Act (now the Construction Act, RSO 1990, c C.30) for the full amount found to be owing by Anthony Mascia;

d. dismissed Tri-Star’s claim against Loretta Mascia;

e. dismissed without costs the Mascias’ counterclaim against Tri-Star; and

f. ordered Anthony Mascia to pay the costs of Tri-Star on a substantial indemnity basis fixed in the amount of $256,163.05.

[3] The Fresh as Amended Notice of Appeal delivered for Anthony Mascia indicated that the appeal is made as of right. But in his factum he seeks leave to appeal if necessary to challenge the trial judge’s costs order.

[4] For the reasons that follow, the appeal is dismissed.

The Basic Facts

[5] I set out only as much as is necessary to deal with the issues on appeal. What follows is not intended to be a complete recitation of the evidence heard by the trial judge nor of his fundings.

[6] In April 2015, a flood damaged the Mascia family cottage in Selkirk Ontario. Anthony Mascia holds title to the cottage. Loretta Mascia is Anthony Mascia’s mother. She held a mortgage on the cottage property.

[7] Anthony Mascia’s father, Emilio Mascia, took out the insurance policy on the cottage in his name. They submitted a claim to the insurer for coverage for the cost of repairing the flood damage. The insurer denied the claim initially.

[8] With no insurance coverage yet available, Anthony Mascia shopped around for a contractor to remediate and rebuild the cottage. He received several quotes all prepared using Xactimate software. Xactimate is software used by insurance companies to estimate jobs. Although Anthony Mascia was looking to retain a contractor for himself, he and his father continued to pursue coverage with their insurer. Anthony Mascia asked Tri-Star to prepare estimate documents using Xactimate software so he could use them to advance his insurance claim.

[9] Anthony Mascia retained Tri-Star to repair the cottage. He retained it to do two types of work. First, Tri-Star was to remediate extensive water and mould damage caused by the flood. Then, Tri-Star was to rebuild parts of the cottage.

[10] From June to early September, 2015, Tri-Star completed the bulk of the remediation work and some of the rebuilding work. As Tri-Star delivered ongoing and increasing estimates for the cost of the work that Anthony Mascia wanted it to do, the relationship between them broke down.

[11] In early September, Anthony Mascia became ill. His father Emilio Mascia took over dealing with Tri-Star for his son.

[12] On September 10, 2015, with the parties’ cost estimates far apart, Emilio Mascia told Tri-Star to stop working and to leave the property. None of the Mascias had criticized Tri-Star or terminated the retainer prior to that time.

[13] By September 10, 2023, Anthony Mascia had already paid Tri-Star $300,000.

[14] Tri-Star started this lien proceeding in 2015. It claimed that Anthony Mascia owed it almost $260,000 as a result of his summary termination of the project. Tri-Star named Loretta Mascia as a party defendant because her mortgage could be affected by its lien claim.

[15] Anthony Mascia counterclaimed against Tri-Star for misrepresentation and fraud among other things.

[16] The trial commenced for a week in February, 2022 and then continued for a week in April, 2022. During the two-month hiatus, Anthony Mascia withdrew his counterclaim. However, up to the trial, Anthony Mascia advanced and actively relied on the allegations in his counterclaim. Two days before the initial commencement of the trial, counsel for Anthony Mascia wrote to counsel for Tri-Star:

If your client proceeds with this trial, what is left of his already tattered reputation is not going to survive intact. We would suggest that your client may want to consider whether this litigation is the best way for him to proceed.

[17] Ultimately the trial judge held Anthony Mascia liable for $160,171.70 plus interest. He awarded substantial indemnity costs against Anthony Mascia as a result of the unsuccessful allegations of fraud in the counterclaim.

The Contract

[18] The parties signed a Work Authorization on June 17, 2015. It was presented as a standard form used by Tri-Star. The relevant terms included:

We agree that the total cost of the work will be in accordance with the original estimate and any supplemental estimates prepared by Contractor and approved by the adjuster for our insurance company, plus any change orders approved by Owner and Contractor.

This work authorization, along with all approved estimates, supplemental estimates and change orders shall constitute the contractual obligations between the Owner and the Contractor.

Our insurance company is N/A and we authorize them to pay all proceeds due Contractor payable under a policy directly to Contractor. If our names are included on the payment, we agree to promptly endorse said payment to Contractor.

Due to the nature of the work no completion date is specified. No verbal agreements are binding on Contractor. [Emphasis added.]

The Estimates

[19] On July 8, 2015 Tri-Star provided its “original estimate.” Tri-Star’s original estimate provided the price for remediation at $137,584.88, and it provided a restoration estimate of $224,030.86.

[20] Remediation work commenced in June and continued through July, 2015. The trial judge found:

[33] By July 28, 2015, Tri-Star advised Mascia by email that it had done the following work: emergency/mold remediation, HVAC, electrical, delta wrap, weeping system/flushing/French drain and work on the chimney. Tri-Star further advised Mascia that the Plaintiff had purchased or ordered building material and needed a second deposit of $150,000.00 to cover, inter alia, the cost of the following material: insulation/vapour barrier/drywall, windows and doors, kitchen cabinets, quartz counter tops, all flooring material, stone wall (refacing the fireplace and for another wall), and bathroom cabinets.

[34] After a month of painstaking emergency and mold remediation, the August 4, 2015 Lab Report showed an acceptable level of mold in the house.

[21] The focus of Tri-Star’s work then shifted to rebuilding the cottage. The scope of this work changed throughout August. The work was carefully documented in notebooks, and with pictures and videos.

[22] The trial judge described the state of affairs through July and August of 2015 as follows:

[63]…I accept that, at the time the original estimates were sent to Mascia, the full extent of the mold damage was not known because the Lab Report regarding the extensive mold issue had not yet been received by the plaintiff. At the same time, Mascia had not yet selected the finishes and finalized the scope of the re-build. Mascia and his wife spent the better part of July and part of August finalizing these items.

[64] I accept the plaintiff's arguments that Mascia knew or ought to have known that the July 8th estimates were not the "final estimates", that bound the plaintiff to complete the work for that price. This is also evident from Mr. Battison's repeated requests for the plaintiff to provide the "final" estimates when they became available. I reject Mascia's testimony that he believed that the selected rebuild finishings had been discussed prior to July 8, 2015, and were included in the July 8, 2015 estimates. Indeed, during the entire months of July and August, Mascia and his wife repeatedly emailed the plaintiff the work they wanted done.

[65] According to Sullivan, Mascia and Stephanie made many changes, made requests daily, and had specific wants and desires. This is borne out in the plethora of emails from Mascia and his wife to Tri-Star. Of import is the fact that there is not one email or communication from Mascia during the month of July and August stating that price was an over-riding consideration for him.

[23] On September 3, 2015, Tri-Star delivered updated estimates. It increased the estimated price for the rebuilding work from $235,329 to $547,783.40.

[24] Anthony Mascia was upset and questioned Tri-Star. Its president said that the price was generated by the Xactimate software based on the work required by Anthony Mascia and his spouse.

[25] On September 9, 2015, Anthony Mascia asked for seven more changes to the scope of the rebuild and the plaintiff provided a revised estimate.

[26] On October 2, 2015, after being removed from the project, Tri-Star provided a final estimate for the rebuild work of $339,251.79. This was the price claimed for all rebuild work completed by Tri-Star to September 11, 2015. The price included the extra work requested by Anthony Mascia and his spouse in emails. When added to the cost of remediation and then giving credit for the $300,000 already paid, Tri-Star claimed to be owed a further $193,170.95,

The Windows and other Customized Goods at Tri-Star’s Warehouse

[27] At the time that Anthony Mascia terminated the project, Tri-Star had purchased around $64,000 in custom-ordered goods for the rebuild including vanities, hand-etched flooring, and customized windows. These were high-end, highly customized items in the main.

[28] Tri-Star had these goods in its warehouse. Anthony Mascia asked for the windows, sinks, and toilets. Tri-Star refused to deliver any of the goods until Anthony Mascia paid the full $193,170.95 that Tri-Star claimed he owed.

[29] Later, Tri-Star offered to release the windows upon Anthony Mascia paying the price for the windows into a lawyer’s trust account pending the outcome of the dispute. Anthony Mascia declined and instead went out and bought new windows. This left the initial customized windows redundant and nearly valueless.

Jurisdiction

[30] The appeal lies to this court pursuant to s. 71 (1) of the Construction Act.

Standard of Review

[31] The standard of review is the usual standard for appeals set out by the Supreme Court of Canada in Housen v. Nikolaisen, 2002 SCC 33, at paras. 8, 10, 19, 26-37. Lococo J. recently described this standard of review comprehensively in Kitmitto v. Ontario (Securities Commission), 2024 ONSC 1412:

[25] The standard of review is correctness for questions of law, including legal principles extricable from questions of mixed fact and law.

[26] The standard of review is palpable and overriding error for questions of fact and for questions of mixed fact and law (where the legal principle is not readily extricable), including with respect to the application of correct legal principles to the evidence.

[27] A palpable and overriding error is an obvious error that is sufficiently significant to vitiate the challenged finding: Longo v. MacLaren Art Centre, 2014 ONCA 526, 323 O.A.C. 246, at para. 39. The appellant must show that the error goes to the root of the challenged finding such that it cannot safely stand in the face of the error: Waxman v. Waxman (2004), 2004 39040 (ON CA), 186 O.A.C. 201 (C.A.), at para. 297, leave to appeal refused, [2004] S.C.C.A. No. 291.

[28] When the decision under appeal is fact-intensive or involves the exercise of discretion, care must be taken in identifying extricable errors of law since the process of severing out legal issues can undermine the standard of review analysis. An arguably unreasonable exercise of discretion is not an error of law or jurisdiction: Wood Buffalo (Regional Municipality) v. Alberta (Energy and Utilities Board), 2007 ABCA 192, 80 Alta. L.R. (4th) 229, at para. 8; Natural Resource Gas Limited v. Ontario (Energy Board), 2012 ONSC 3520 (Div. Ct.), at para. 8; Conserve Our Rural Environment v. Dufferin Wind Power Inc., 2013 ONSC 7307 (Div. Ct.), at para. 13.

[170] An appeal court will interfere with a tribunal’s costs award only if the tribunal made an error in principle or was plainly wrong: Kennedy v. College of Veterinarians, 2018 ONSC 3603 (Div. Ct.), at para. 24, citing Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.

The Lien Concession

[32] Tri-Star concedes that it should not be entitled to a lien for the value of the goods that remain in its warehouse. I make no ruling on this issue except to enforce the parties’ agreement. Accordingly, the value of the lien set out in paragraph 4 of the judgment is to be reduced by $64,921.87

The Appellant’s Three Submissions

[33] Anthony Mascia challenges three principal holdings made by the trial judge. First, he claims that Tri-Star was bound by its original estimate for remediation work as it was a fixed price contract. Second, he submits that the trial judge erred in granting quantum meruit for the $64,000 in goods that were in Tri-Star’s warehouse but were never delivered to the cottage. Finally, he submits that the trial judge erred in granting costs against him on a substantial indemnity basis.

Fixed Price Contract for Remediation

[34] Anthony Mascia submitted below and to us that there was a fixed price contract for the remediation work. The contractor was bound to the agreed upon fixed price and had no right to increase the price as the amount of work increased beyond what the contractor had estimated.

[35] The problem is that there was no price set out or agreed in the contract document on which Anthony Mascia relies. When the parties signed the Work Authorization form on June 17, 2015 the “original estimate” was not yet delivered. Rather, Tri-Star was working on it and delivered the original estimate weeks later on July 8, 2015.

[36] Mr. Rumble submits that trial judge did not pay sufficient attention to the words of the June 17, 2015 contract as required by the relevant interpretation principles. But, as highlighted by the bolded words in the Work Authorization quoted above, pricing was to be in accordance with the original estimate and any supplemental estimates prepared by Contractor and approved by the insurer and any change orders approved by Anthony Mascia and Tri-Star.

[37] The price then was not fixed. It was to evolve as estimates were advanced and agreed between the parties. As there was no approved insurer recognized in the Work Authorization, it is apparent that Anthony Mascia would have to approve the estimates.

[38] A fixed price contract was not appropriate for this project because remediation had to follow strict protocols set by an independent body referred to as “the IIRC”. One does not know what will be required until the walls are opened, the scope of mould is understood, remediation is undertaken, and independent lab tests confirm that the mould is gone (or within lawful levels).

[39] Moreover, the parties intended to and used Tri-Star’s Xactimate software to set the price of estimated work on a unit of work basis. Tri-Star input the work required and the Xactimate blackbox applied an algorithm to set a price. The issue for the parties to negotiate to reach pricing then would be the scope of work required or desired by Anthony Mascia and his spouse.

[40] Mr. Rumble submits that the agreement is to be interpreted in accordance with its wording. Subsequent conduct cannot be relied upon for interpretation. Yet he seeks to hold Tri-Star to the subsequently estimated price of remediation in the July 8, 2015 original estimate. The wording of the July 8, 2015 estimate and the Work Authorization indicate that it was just an “estimate” and was subject to further estimates.

[41] Mr. Rumble accepts however that for the rebuilding work there was no fixed price contract and quantum meruit applies. But this work is dealt with in the same Work Authorization form that counsel submits must be interpreted as a fixed price contract as at June 17, 2015 without consideration of subsequent events. The concession on the rebuilding work is inconsistent with the submission trying to bind Tri-Star to the original estimate for the remediation work.

[42] The judge found that at July 8, 2015, the extent of the mould damage was not known as the first lab report was not yet received. He held:

[79] It seems evident that the defendants do not want to pay the additional costs of mold testing done for the month of July and up to and including August 4, 2015, even though Mascia was informed that Tri-Star would continue to do testing until the Lab report came back with an acceptable level. The mold protocol was dictated by IIRC and not by Tri-Star meaning, that remediation had to be performed to a certain standard to make the house safe for occupancy.

[80] Moreover, the defendants do not want to pay for other items, including but not limited to, the orange coloured containment areas set up as per IIRC standards that were used to prevent cross-contamination, the additional content cleaning, the cleaning 45 boxes of Mascia's contents, the two additional bins to remove the additional water and mold contaminated material from the house which included the removal of all of the house's windows on July 23. In addition, the defendants do not want to pay for the additional cleaning and HEPA vacuuming and the cost to remove more of the insulation due to the pre-existing mold and dry rot found in the attic. For the work in the Dining Room, Living Room, Bathroom ( main floor), Laundry room, Bathroom (second level), Hallway (second floor), Master Bedroom, Ensuite, Bedroom 1, Bedroom 2, Bedroom 2 and the HVAC work, the final estimate was lower than the July 8th estimate. For other work on the final mold estimate, the costs were the same as on July 8, or the changes were nominal.

[86] The plaintiff completed or attempted to complete much additional work other than what was set out in the July 8 estimates that Mascia explicitly requested be done or implicitly knew was being done. I agree with the plaintiff that Mascia appears to want much of the remediation work to be done for free, at cost or without profit.

[43] The judge found that email approvals for scope changes given by Anthony Mascia and his spouse were sufficient to bind them to pay for work that they ordered.

[44] The trial judge made the following key findings about the contract between the parties:

[66] I find that the Authorization did not provide for a lump sum price. It did not state that payment was based on a tally of invoices, time sheets, and receipts. I accept Zaraliakos' evidence that Mascia knew that he would receive "estimates" and "supplementary estimates" as the project continued. Mascia knew and agreed that the price of the contract would be based on "estimates" provided by Tri-Star.

[67] These remediation "estimates" would be generated by the Xactimate software…

[85] I observe that the CLA calls for the value of the lien work to be based on the price agreed upon, which in this case was the Xactimate estimate and some bid items; and where no price was agreed upon, the actual value of the services and materials. Even if there was no price agreed to with respect to additional or necessary material and services, then the actual value of the services and materials are amounts set out in the estimates, which were based on the Xactimate costing. Again such costing is used throughout the restoration business.

[45] The judge ultimately found that the unsettled estimates, the parties’ subsequent conduct, prolific communication, along with the services and materials provided by Tri-Star gave rise to a claim of quantum meruit for both the remediation and rebuild work.

[46] Interpretation of a contract is a question of mixed fact and law. Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 50. Mr. Rumble relies on the judge’s reference to the contract being a “unit price contract” to submit that he made a palpable and overriding error because the contract was a fixed price contract.

[47] I see no error in the judge’s treatment of the parties’ relationship. They agreed to price the jobs as the scope of work evolved and estimates for completion of the work were prepared using the Xactimate software. Some work was done before the pricing estimates for the work were agreed. Other work was still being scoped when the proposed pricing led Anthony and Emilio Mascia to terminate the relationship.

[48] The judge applied the correct legal tests to find that in the absence of completed terms finalizing a contract, including especially, the price, restitutionary relief of quantum meruit is available.

[49] The judge correctly held that quantum meruit is available when work is performed at the request, or with the encouragement or acquiescence, of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services. Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2007 ONCA 324 at para 99.

[50] The judge did not use subsequent conduct to interpret the June 17, 2015 Work Authorization. Rather, the conduct showed that the agreements and approvals of estimates contemplated by the Work Authorization were never completed. The fact that Anthony Mascia’s lawyer kept asking for “final estimates” was not used to interpret what the Work Authorization meant. Rather, seeing that the Work Authorization called for original and subsequent estimates subject to agreement by both sides, the trial judge was entitled to use the call for “final estimates” to show that the condition subsequent to reach an agreement on price was never completed.

[51] There was no fixed price agreement for either remediation or rebuilding work. The judge’s findings were rooted squarely in the evidence before him and the credibility findings that he was entitled to make. There is no palpable or overriding error made by the trial judge.

Should Quantum Meruit include $64,000 for goods in Tri-Star’s Warehouse?

[52] The trial judge found that Tri-Star had purchased goods for the project but they were still in Tri-Star’s warehouse when Anthony Mascia cancelled the project and excluded Tri-Star from attending at the cottage.

[53] As a matter of contract law, I would quickly conclude that goods purchased for another that are not delivered due to a breach by the proposed recipient are properly the subject of a claim for reimbursement. Damages are incurred by the purchase at the request of the other party and then the other party’s refusal to pay. There could then be a question of mitigation as to whether the person who holds the goods can return them or liquidate them for some value to avoid double recovery. But there was evidence at trial that the customized goods had no significant realizable value.

[54] Mr. Rumble submits that as a matter of quantum meruit, Tri-Star is not entitled to recovery because quantum meruit requires unjust enrichment. As Anthony Mascia never received the windows and other customized goods from Tri-Star, he received no benefit from them. It cannot be “unjust for the opposing party to retain the benefit” when there was no benefit received by him at all.

[55] The trial judge denied Tri-Star’s claim for profit on installation of the windows as they were never installed. But he allowed the claim for reimbursement of the cost of the windows and other customized goods both as a claim for breach of contract and quantum meruit. At para. 120, he held:

…Even if Tri-Star was found to not have a claim for lien because the items were not delivered to the site, the plaintiff could seek compensation for those items on the basis that, since the lien claim is joined with the contractual claim for payment, Tri-Star would be entitled to compensation on the basis of "contractual "quantum meruit" for the reasonable remuneration for the supply of services and materials due being abruptly terminated by the defendants.[^1]

[56] In my view, Mr. Rumble treats the nature of the “benefit” received by his client too narrowly. In the absence of case law to the contrary, it seems to me that Anthony Mascia received a benefit when Tri-Star used its own funds to buy customized goods for his project and held them at its warehouse. If Tri-Star could have returned the goods or used them otherwise, perhaps there would have been less detriment suffered by it. But here, Anthony Mascia does not have the windows because he preferred to spend insurance money on new windows rather than to pay into trust the cost of the windows bought for him by Tri-Star. Tri-Star has been left with valueless windows it bought at the request of Anthony Mascia.

[57] I see no palpable or overriding error in the judge’s treatment of the issue. In fact, I agree with him.

Costs

[58] Costs are discretionary. They will not be interfered with on appeal except where the judge made an error in principle or was plainly wrong.

[59] As the trial judgment is not being set aside, Anthony Mascia would need leave to challenge just the costs award.

[60] Regardless, the judge made neither an error in principle nor was he plainly wrong in his discretionary decision to award costs against Anthony Mascia on a substantial indemnity basis.

[61] Mr. Rumble points to complaints that his client has with the document production process and other steps taken by Tri-Star and its counsel in the prosecution of the actions.

[62] It is not our role to re-weigh the factors balanced by the trial judge in the exercise of his wide discretion. He relied on clear authority supporting a costs penalty against a party who alleges fraud and fails to prove it at trial.

[63] Moreover, the threat sent by counsel to Anthony Mascia just days before the trial commenced was reprehensible. The fraud claim so aggressively asserted could not even survive the first week of trial. Yet it was maintained for seven years and brandished as a weapon right up to the end. It deserves sanction in costs if not more.

Disposition

[64] On consent the value of the lien set out in paragraph 4 of the trial judgment dated January 6, 2023 is reduced by $64,921.87.

[65] The appeal is otherwise dismissed.

[66] As agreed between counsel, costs of this appeal are to be paid by the Anthony Mascia to Tri-Star fixed in the amount of $25,000 all-inclusive.

“Myers J.”

“Lococo J.”

“O’Brien J.”

Date: March 22, 2024

CITATION: Mascia v. Tri-Star Disaster Recovery Inc., 2024 ONSC 1704

DIVISIONAL COURT FILE NO.: DC-23-228 DATE: 20240322

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Lococo, Myers, and O’Brien JJ.

BETWEEN:

ANTHONY MASCIA and LORETTA MASCIA Appellants

– and –

TRI-STAR DISASTER RECOVERY INC. Respondent

REASONS FOR DECISION

FL Myers J

Date: March 22, 2024

[^1]: See also para. 124 of the trial judge’s reasons.