CITATION: 1814219 Ontario Inc. v. 2225955 Ontario Ltd., 2024 ONSC 5495

DIVISIONAL COURT FILE NO.: DC-24-01514-0000

DATE: 20241004

ONTARIO SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Fitzpatrick, O’Brien and Cullin JJ.

IN THE MATTER OF THE CONSTRUCTION LIEN ACT, R.S.O. 1990, C. C.30

BETWEEN:

1814219 ONTARIO INC. c.o.b. as UM CONSTRUCTION

Plaintiff (Respondent)

– and –

2225955 ONTARIO LTD., DAYTONA AUTO CENTRE LTD., DAYTONA AUTO SALES INC. and ROYAL BANK OF CANADA

Defendants (Appellants)

AND BETWEEN:

2225955 ONTARIO LTD.,

Plaintiffs (Appellant)

-and-

UMBERTO MAUTI, FRANK MURDOCCA a.k.a. FRANCESCO MURDOCCA, GIUSEPPE VILLANO, 1814219 ONTARIO INC. c.o.b. as UM CONSTRUCTION, MURDOCCA CORPORATION and WALDORF CONSTRUCTION INC.,

Defendants (Respondents)

AND BETWEEN:

GIUSEPPE VILLANO

Plaintiff (Respondent)

– and –

2225955 ONTARIO LTD., and ROYAL BANK OF CANADA,

Defendants(Appellants)

AND BETWEEN:

251485 ONTARIO LTD., AND 2225955 ONTARIO LTD.,

Plaintiff (Appellants)

-and-

GIUSEPPE VILLANO

Defendant (Respondent)

Counsel:

• Maria Ruberto & Neeta Sandhu, for the Plaintiffs/Defendants by counterclaim (Respondents) 1814219 Ontario Inc. c.o.b. UM Construction and Umberto Mauti
• Matthew G. Moloci & Kayla Carr & Piper Mckerlie for the Defendants/Plaintiff by counterclaim (Appellants), 2225955 Ontario Ltd., Daytona auto Centre Ltd., and 251485 Ontario Ltd.
• Emilio Bisceglia & Hana Tariq for the Defendant/Plaintiff by counterclaim (Respondent), Giuseppe Villano
• Paul Feldman for the Defendants (Respondent) Frank Murdocca, Murdocca Corporation and Waldorf Construction Inc.

HEARD at Oshawa on June 27, 2024

REASONS FOR DECISION

Fitzpatrick J.

Overview

[1] 2225955 Ontario Inc. ("222") and Daytona Auto Centre Ltd. ("Daytona") (collectively, the "Appellants") appeal a judgment, dated August 16, 2023, and a costs decision, dated January 4, 2024, resulting from four consolidated actions that proceeded to trial before The Honourable Justice M.E. Vallee in the Superior Court of Justice at Newmarket.

[2] The trial took place over seven weeks, culminating in a 90-page decision released on August 16, 2023 (the "Decision"). There were 347 numbered exhibits and 25 lettered exhibits filed during the trial. The court heard affidavit and viva voce testimony from 18 witnesses.

Background

[3] The actions and counterclaims tried before Vallee J. related to a construction project on lands located at 7393 Weston Road, in Vaughan. (the "Project"). The parcel of land intended for construction was roughly 3 acres. It was owned by 222. The Project involved construction of a commercial building, which in turn required excavation of the land, the moving of soil, and site servicing, among other things. The budget for the project was in the order of 4.5 million dollars. The Project was completed and 222 took occupancy of the finished building in October 2017. The newly constructed commercial building now houses a luxury pre-owned car sales business, Daytona Auto Sales. The business sells Ferraris, among other types of cars.

[4] The Project involved several parties:

a. John Duca ("Duca") is the principal of 222 and acted as the Project's general contractor. Duca was a very important witness during the trial.

b. Giuseppe Villano ("Villano") was contracted by 222 in Spring 2015 to act as site supervisor for the Project. Villano did not have a great deal of experience acting as a site supervisor, particularly for a commercial project complicated by unanticipated site soil conditions. In a somewhat unusual commercial arrangement, 222 and Villano decided that Villano would be compensated for his work with a new Ferrari.

c. 1814219 Ontario Inc. c.o.b. as UM Construction ("UM") was contracted by 222 to provide excavation and site servicing work for the Project. Umberto Mauti ("Mauti") is the principal of UM.

d. Murdocca Corporation ("Murdocca Corp.") and Waldorf Construction Inc. ("Waldorf") were contracted by Villano in Spring 2015 to provide basement excavation, trucking services, materials, and equipment for the Project. Murdocca Corp. and Waldorf subcontracted some work to UM around April 17, 2015. Frank Murdocca ("Murdocca") is the principal of both Murdocca Corp. and Waldorf (the "Murdocca Defendants").

[5] Villano, UM, Mauti, and the Murdocca Defendants will collectively be referred to as “the Respondents”.

[6] Development of the Project was subject to a Site Plan agreement with the municipality of Vaughan. Site preparation work for the Project commenced on May 27, 2015.

[7] The soil conditions on the Project lands were central to the dispute that developed between all parties involved in this litigation. These poor soil conditions were discovered near the start of the Project and caused a significant escalation in the price of completion. Blame for this problem was a central issue at trial. Another dispute at trial was the excavation and trucking of soil on and off the Project lands in June and July 2015. The trial judge’s manner of dealing with relevant evidence about the handling of this poor-quality soil became a focus of the appeal.

[8] When excavation for the basement and footings of the building began on June 10, 2015, a problem was immediately identified. The newly excavated soil was filled with debris and garbage. A geotechnical engineer, Mr. Lai, was called in. He determined that the soil on site was not suitable for backfill, and that it would have to be removed and replaced with suitable soil. In addition, the poor soil quality meant that a foundation extension would be required to support the intended building. Additional excavation was also necessary to reach load bearing soil. This increased the cost of the Project.

[9] At trial, 222 took the position that Mr. Lai made gratuitous comments about the quality of the excavated soil. Furthermore, 222 claimed that none of the soil was trucked off site. 222 instead alleged that the Respondents had acted fraudulently in having 222 pay for these trucking services as they occurred in June and July 2015. The Respondents took a different view.

[10] A great deal more construction work occurred after June 2015, including completion of the excavation, pouring of the foundation, construction of the building, site servicing, paving, and electrical connections to the main power grid. The evidence concerning this construction work was addressed in a fulsome way by the trial judge but is not the focus of the appeal.

The Litigation

[11] Two of the four actions now under appeal are construction lien actions.

[12] UM filed a lien against the Project in November 2016 for unpaid site servicing invoices. The lien was perfected and went to trial with the three other actions at issue. UM sought $399,990.12 for unpaid site servicing invoices and its loss of profits. 222 counterclaimed, alleging fraud and breach of fiduciary duty.

[13] Villano filed a lien against the Project in July 2017. Villano sought $198,510.35 for unpaid site supervising compensation and for work carried out on the Project. As noted previously, Duca had initially agreed to give Villano a Ferrari 430 as compensation for his work as site supervisor. However, that car had been sold in the interim. Instead, Duca gave Villano another car, a Ferrari 360 (the "Ferrari") as partial payment. The Ferrari remains in Villano's possession. 222 counterclaimed, alleging fraud and breach of fiduciary duty against Villano.

[14] The fact that the Ferrari remains in Villano’s possession is the basis upon which Duca appeals the costs award given by Vallee J. following the release of the Decision.

[15] In a separate action, tried together with the lien matters, 222 claimed damages for fraud and breach of fiduciary duty collectively against the Respondents. Its claim repeated the allegations in its counterclaims against UM and Villano. In response, Villano counterclaimed against 222 and Duca seeking the same damages sought in his lien action and crossclaimed against Mauti and UM for contribution and indemnity.

[16] In the fourth action, against Villano, 251485 Ontario Ltd. ("251") and 222 sought $80,000 in damages and a declaration that 251 owned the Ferrari. Villano counterclaimed, seeking a declaration that he was the owner of the Ferrari and, or alternatively, $198,510.35 (the same amount he sought in his lien action) less the value of the Ferrari.

The Decision of the Trial Judge

[17] The 90-page decision of the trial judge was detailed and lengthy.

[18] At para. 8 of the decision Vallee J. lists the issues for trial as follows:

a. Did Mr. Villano, as site supervisor, have a fiduciary duty to 222?

b. Did any of the defendants in the fraud action perpetrate a fraud on 222?

c. Could any of the excavated soil have been spread on the property?

d. Did any of the defendants trespass on the property by dumping soil on it?

e. How much is UM entitled to be paid by 222?

f. Is 222 entitled to a set off?

g. How much is Mr. Villano entitled be paid by 222?

h. What should happen to the Ferrari 360?

[19] By the end of the 457-paragraph decision, Vallee J. determined, in addition to resolving the issues listed above, that it was appropriate to issue a judgment in favour of UM as follows: $347,676.16 for the lien; $22,600, for an invoice not included in the lien; $29,713.96 for loss of profits; and $21,610.43 for pre-judgment interest, for a total of $421,600.55. Vallee J. dismissed 222's counterclaim for fraud.

[20] Villano’s lien claim was also granted, with judgment in favour of Villano as follows: $150,000 for the lien; and $7,334.79 for pre-judgment interest, for a total of $157,334.79. Vallee J. ordered that once the Villano’s judgment was paid, Villano was to return the Ferrari to 222. Vallee J. dismissed 222's counterclaim.

[21] Vallee J. dismissed 222’s fraud action, along with Villano's counterclaim and his crossclaim, which were repetitions of his claim for lien. All other claims and counterclaims in this matter were dismissed.

[22] Vallee J. made the following costs orders:

a. 222 to pay $799,276.22 to UM for its full-indemnity costs;

b. 222 to pay $396,573.32 to the Murdocca Defendants for their full-indemnity costs;

c. 222 to pay $787,204.56 to Villano for his full-indemnity costs; and,

d. 222 and Villano to each pay $21,357 in storage fees to 2312912 Ontario Inc.

The Business Record Evidence

[23] Near the beginning of the Decision, at para. 6, Vallee J. addressed the agreement between the parties on how the trial evidence went in. She stated:

[6] Many of the witnesses swore affidavits to serve as their evidence in chief. Even though the four actions were tried together, by agreement of the parties, each witness testified only once. Any party could have made a request to recall a witness. None did.

[24] This agreement affected how the trial proceeded and what is now a focus on appeal. The case had been subject to significant case management. UM, Murdocca, and Waldorf Corporation had all served and filed business records notices under s. 35 of the Evidence Act, R.S.O. 1990 c. E 23 (“the Evidence Act”) on 222 before trial. 222 filed an objection. Essentially, 222 required each of the Respondents to prove everything contained in the business records notice. Accordingly, the trial involved hundreds of pages of business records plus viva voce testimony and affidavit evidence from 18 witnesses. This was addressed at paras. 9–10 of the Decision, where Vallee J. stated the following:

[9] Prior to trial, UM, Murdocca and Waldorf served business records notices on 222. They were opposed. The Notice of Intention to Dispute stated that 222, Daytona Auto Centre, Alex Armellin and John Duca,

[ ... ] intend to dispute the correctness, genuineness or authenticity of documents sought to be admitted and relied upon by the producing parties, below, pursuant to section 35 of the Evidence Act, R.S.O. 1990 c.E.23, as amended. The objecting parties require the producing parties to call evidence to prove the correctness, genuineness or authenticity of said document, which include but are not limited to documents produced by affidavits of document, pursuant to court order, or produced pursuant to undertakings.

[10] This trial involved hundreds of pages of business records. UM and Murdocca and Waldorf had to prove the work done, the materials supplied and the related invoices through viva voce evidence. This consumed many trial days. For this reason, and because there are several sets of invoices, the dates of which are interwoven as the project progressed, the dates of various events, the dates of the invoices and the evidence of the witnesses regarding the events and the invoices is set out below in detail in chronological order.

The Standard of Review

[25] The parties agree on the applicable standard of review on this appeal. The court will intervene on an appeal from an order of a judge only where the judge made either an error of law, or a palpable and overriding error of fact or mixed fact and law: see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, 211 DLR (4th) 577 at paras. 1–5, 10, 25. For an error of law, the standard is “correctness”. An error is "palpable" if it is "clear to the mind or plain to see" and "overriding" if it "discredits the result." The Ontario Court of Appeal considers the following to be examples of errors in the fact-finding process:

(a) a failure to consider relevant evidence; (b) misapprehension of relevant evidence; (c) consideration of irrelevant evidence; (d) a finding that had no basis in the evidence; and (e) a finding which amounts to speculation rather than legitimate inference.

[26] Appellate courts apply a high degree of deference to a trial judge’s finding of fact.

[27] Where a judge has made an order in the exercise of judicial discretion, the court will intervene only if the exercise of the judge’s discretion was based on an incorrectly applied principle, a failure to consider a relevant principle, or a misapprehension of the evidence: see Aldo Group Inc. v. Moneris Solutions Corporation, 2013 ONCA 725, 118 O.R. (3d) 81, at para. 30.

The Issues on Appeal

[28] The Appellants frame the appeal as consisting of three issues:

Issue 1: Did the learned trial judge err in law by admitting documents and viva voce evidence about those documents which were presumptively inadmissible?

Issue 2: Did the learned trial judge make palpable and overriding errors by misapprehending, misconstruing, and drawing inferences from the evidence regarding excavation, soil quality, trucking, and dumping?

Issue 3: Did the learned trial judge err in making substantive findings of fact and liability in her decision on costs?

[29] In their written factum, the Appellants state the following:

“This appeal primarily concerns the admission and reliance upon inadmissible hearsay evidence contrary to the principles set out in the Court of Appeal decisions in Bruno v Dacosta and Girao v Cunningham, and the trial judge's misapprehension and drawing of inferences regarding excavation, trucking, soil quality and dumping. These errors go to the core of Her Honour's findings of fact and conclusions in all four actions.”

[30] The beginning of the first sentence summarizes the nature of Issue 1 on this appeal. The second part of the sentence, commencing at “and the trial judge’s misapprehension,” is a summary of Issue 2.

[31] Submissions from all parties addressed the issues on appeal as framed by the Appellants. The Appellants’ oral submissions focused on Issues 1 and 2. Issue 3 related only to the costs decision between the Appellant Daytona Auto Centre Ltd. and the Respondent Villano. During oral argument, the Appellants clarified that the appeal on this third issue sought only to set aside the order requiring the Appellant Daytona Auto Centre Ltd. to pay storage costs for the Ferrari.

Analysis Overview

[32] The Appellants focus on the admissibility of a relatively small number of documents, all of which were introduced through viva voce testimony, as their basis for reversing the entire Decision. The Appellants take issue with five exhibits in a seven-week trial where there were 347 total exhibits. These documents (“the Documents”) are the following:

a. Exhibit 4, “Wendy’s Trucking Invoices and Dump Tickets”;

b. Exhibit 5, “Berard Transportation Invoice and UM Payment”;

c. Exhibit 6, “Handwritten Notes”;

d. Exhibit 8, "Dump Tickets from Millenium and GTAFill Earthworks”; and

e. Exhibit 9 - “GTAFill Earthworks Ticket No. 65 and 134 with Proof of Payment”.

[33] In my view, the trial judge did not err by admitting the Documents for the following reasons, which are further explained below:

a. Section 35 of the Evidence Act did not require the Documents to be found inadmissible. The Documents were properly admitted on a principled approach to hearsay through viva voce testimony.

b. The specific number of trucks was not important in the context of the trial because 222 took an “all or nothing” approach. It alleged fraud against the Respondents, claiming the trucking business evidence was for services never rendered. At no time did 222 plead in the alternative that, if some trucking was done, the amounts legitimately owed were less than paid by 222. Meanwhile, the Documents were irrelevant to the lien claims.

c. 222 did not object to the admissibility of the Documents at trial and is attempting to raise a new issue on appeal.

[34] Further, even if there was an error in admitting the Documents, they had no impact on the outcome of the trial. The Appellants have taken a very small portion of the Decision, which focuses on a relatively minor aspect of a much bigger picture and sought to blow it up to a proportion that justifies overturning a seven-week trial judgment and ordering a new trial. I am not persuaded this is justified. The trial judge equally relied on viva voce evidence to conclude the trucking occurred and on the totality of the evidence to conclude there was no fraud.

[35] Vallee J. also made no palpable and overriding errors by misapprehending, misconstruing, or drawing inferences from the evidence regarding excavation, soil quality, trucking, and dumping. The cost award in favour of Villano was reasonable in all the circumstances.

[36] I therefore dismiss the appeal for the following reasons.

Issue 1

[37] The Appellants submit that because they filed objections to the Documents, the Respondents were required to call the actual truck drivers who did the work to testify. I disagree.

[38] Section 35 of the Evidence Act is not a complete code for determining the admissibility of documents. Instead, it provides a process for facilitating the admissibility of business records. It creates an exception to the rule against the acceptance of hearsay. Simply filing an objection to an Evidence Act notice does not automatically create or require a process that only permits the admissibility of documents in one manner. In this case, which was the subject of significant pretrial case management and where issues about the introduction of documents had been addressed, the filing of an objection led to a process where documents were entered through viva voce testimony.

[39] The principled approach to hearsay supplements what was historically an exclusively rules-based approach by permitting a Court to consider hearsay evidence on the basis of its necessity and reliability. This principled approach to hearsay is founded on the idea that evidence which is relevant and material should be admissible.

[40] On their face, all the Documents are business records. If tendered for the truth of their contents without proof from the writer at first instance, they are hearsay. This is a practical problem that is not new.

[41] In my view, the Appellants’ submission that the trial judge committed a reversible error by admitting hearsay evidence has no merit. It would have been a monumental waste of the court’s time to require the actual truck drivers who did the work to testify.

[42] Focusing on the Appellants’ reliance on Exhibits 4 and 5 demonstrates the unnecessary rigidity and unpersuasive aspect of their approach to Issue 1. These exhibits were trucking tickets submitted by drivers as proof they moved loads of material from point A to point B. They are important to the drivers and the payors because they are the basis for remuneration with respect to the specific transactions at issue. However, these are day to day, voluminous type records. Courts should not be unnecessarily dragged into the minutiae of inquiries of this nature when there are live witnesses available to testify that they received documents, knew what they were, and that they caused a corresponding action relevant to the matters at issue at the trial. This is what happened with the introduction of this evidence before Vallee J.

[43] Upon review of the record and the Decision, it is clear that Vallee J. was alive to the possible hearsay problems caused by admitting the Documents into evidence. However, the Documents were introduced through live witnesses whose independent recollection of the events and charges was evident. This meant the evidence was reliable. Vallee J. was entitled to rely on the principled approach to hearsay to admit the Documents into evidence.

[44] The Appellants’ reliance on the Court of Appeal decisions in Bruno v. Dacosta, 2020 ONCA 602 and Girao v. Cunningham, 2020 ONCA 260 is misplaced. In those decisions, the Court of Appeal outlined what it described as “trial practice notes” to provide guidance for handling joint document books at trial. In this matter, the Documents did not form part of a joint document book. The parties did not proceed on the assumption they were being admitted on consent. Rather, as set out above, they were admitted after witnesses identified the Documents, testified to receiving them and in some cases to paying the relevant invoices.

[45] I would not interfere with Vallee J.’s discretionary decision to admit the Documents for two additional reasons.

[46] First, the specific amount of trucking as set out in the Documents was not in dispute at the trial. 222 alleged fraud against the Respondents, taking the position that the trucking records were for services never rendered. This was an “all or nothing approach” with no middle ground. For example, 222 did not include an alternate plea conceding that if the trucking was done, less trucks went in and out from the Project than were invoiced and paid for. 222 instead asked the Court to treat all payments as having been done further to a fraud and for a judgment returning all funds paid. This affected how the trial was conducted and how the evidence was received and evaluated.

[47] The trucking tickets were not relevant to the lien claim at all. UM’s construction lien claim did not include a claim for trucking services. It sought payment for on-site services. The trucking issue was de minimis to its lien claim. The reason UM introduced the trucking evidence early in the trial was because the fraud and lien claims were consolidated into a single trial. UM introduced the evidence in response to the fraud claim, to demonstrate 222 had paid for the services it said were fraudulent. This did not taint the trial as alleged by the Appellants and instead was an appropriate and efficient manner of proceeding in the context of the trial.

[48] Villano’s claim also had nothing to do with trucking. Ultimately, Vallee J. accepted Duca’s valuation of Villano’s work at $150,000 (Decision, at para. 444). The Ferrari was an unusual, and ultimately awkward, business choice made by both Duca and Villano which was appropriately addressed in Vallee J.’s ultimate disposition of the claim.

[49] Overall, in admitting the Documents as part of the defence to the fraud claim, the trial judge would not have been alerted to a specific concern about the precise numbers of truckloads, as opposed to whether any trucking occurred or not.

[50] Indeed, it would have been an error for Vallee J. to have more rigorously assessed the Documents in a trial where they were being proven through viva voce testimony and where the Appellants had not made an alternative plea or even argued that the trucking occurred but that the services had a much smaller economic value than had been collected from 222.

[51] Second, there was no objection to the admissibility of the Documents at the trial. Trial counsel did not object to the admissibility of the Documents, other than Exhibit 6, as they were being admitted through witnesses who had received and processed and paid the amounts demanded in them. The one-page record constituting Exhibit 6 was not expressly entered for the truth of its contents. Even if this failure to object to the Documents as they entered evidence through viva voce testimony was a trial tactic, trial counsel did not make any submission at the end of trial that UM had improperly introduced alleged hearsay evidence.

[52] The failure to object means the Appellants are seeking to introduce a new issue on appeal. Appellate courts will generally refuse to entertain new issues on appeal due to the unfairness caused by forcing a party to respond to a new matter when they might have adduced evidence at trial had they known the matter would be an issue on appeal: see Whitby (Town) v. G & G 878996 LM Ltd., 2020 ONCA 654, at para. 9. In addition, the appellate court is deprived of the reasons of the lower court, which is in the best position to make findings of fact and to exercise discretion in all the circumstance of the case.

[53] I reject the Appellants’ submission that in the absence of an objection, the trial judge had an obligation as gatekeeper to ensure inadmissible evidence was not admitted at the trial. Trial judges cannot be expected to be omniscient. The Documents were admitted through viva voce evidence, there was no objection, and the Appellants’ pleadings did not plead a claim or defence that would have rendered the specific contents of the Documents controversial.

[54] In any event, admitting the Documents had little impact on the trial. In finding truckloads of material had been shipped off site, the trial judge relied on viva voce testimony in addition to the Documents. Although it was not necessary to make a specific finding about the number of truckloads to address the issues pleaded, it was open to her on the record to find as a fact that 208 truckloads had been shipped. For example, Mr. Duca testified he had given permission to move dirt off site for the second phase (Decision, at para. 106), had paid $51,867 in August 2015 for removal of excavated material offsite (Decision, at para. 109) and had seen the trucks going in and out of the site (Decision, at para. 382). The trial judge also made express findings of credibility in the Respondents’ favour. At para. 291 of the Decision, she found that she preferred the evidence of Mr. Mauti on behalf of UM over the evidence provided by Mr. Duca and accepted Mr. Notarantonio’s evidence that Mr. Duca saw the trucking happening, said nothing, and paid for it.

[55] Furthermore, the Documents were just one aspect of a much larger attack 222 made in alleging that the actions of the Respondents had been fraudulent. 222 also alleged fraud with respect to UM’s claims regarding payment for water connection, asphalting, cement, and granular stonework. In other words, 222 cast the fraud net very broadly at trial, and, having been unsuccessful, now seeks to effectively try it again on a much narrower basis.

[56] In context, after reviewing the totality of the Decision and all the findings that were made based on the 18 witnesses who testified, I am not persuaded that the treatment of the Documents influenced, in any material way, the findings of fact, the quantum of damages awarded to the Respondents, or the dismissal of all of 222 and 251’s claims and counterclaims.

[57] This ground of appeal is dismissed.

Issue 2

[58] The first aspect of the Appellants’ position regarding Issue 2 was that Vallee J. palpably misapprehended the trucking evidence. For the reasons just stated concerning Issue 1, I reject that argument. Vallee J. properly and fully assessed and weighed the trucking evidence, including making credibility findings with respect to the testimony at trial. In my view, Vallee J. did not misapprehend the offsite trucking evidence.

[59] The second aspect of Issue 2 is an assertion by the Appellants that Vallee J. erred in finding as fact that the Project soil was unsuitable or unusable for backfill, and that it had to be trucked offsite. I disagree with this submission.

[60] The dispute regarding soil conditions was front and center in the Decision. There was evidence tendered at trial concerning site conditions prior to the commencement of the Project. A 2015 soils report was prepared for Mr. Duca. The results of borehole testing on the site showed significant fill present, which indicated that the soil was not capable of supporting a large commercial building. In other words, the problem of trucking bad soil off site and having to go deeper to meet native, good soil or to bring in better foundation material was evident well before the first shovel hit Project ground. Mr. Duca testified that he did not read the report, or any other earlier soil reports, concerning his lands. Yet he determined it suitable to act as his own general contractor on a 4.5-million-dollar job.

[61] 222 had made a site grading plan with the City of Vaughn which directly impacted how the Project lands would be developed. Based on the evidence discussed at para. 49 of the Decision, Vallee J. found that Mr. Duca, on behalf of 222, had either failed to understand his obligations to the municipality or had decided to do something different to save money.

[62] Mr. Lai, a geotechnical engineer, provided evidence at trial regarding the soil conditions. There was evidence from a land surveyor, Mr. de Rijcke, concerning the soil excavated from the property after deducting backfill. Mr. de Rijcke’s opinion was premised on the assumption that the excavated materials were suitable for backfill. This was contrary to the evidence given by Mr. Lai. Vallee J. did not accept Mr. de Rijcke’s volumetric calculation of the excavated soil. This was a factual decision that Vallee J. was entitled to make, and which is entitled to deference.

[63] Furthermore, the court had evidence from a professional engineer, Mr. Albanese. He too provided the court with expert opinion evidence concerning the calculation of soil volume that ought to have been excavated to allow for proper construction. He relied on the 2015 soil assessment report. His evidence about excavated soil was preferred by Vallee J. over the opinion of Mr. de Rijcke.

[64] There was evidence shown at trial that the walls of the first excavated basement had started to collapse the day the concrete pour started on July 3, 2015. In my view, this was a good indicator that sub soil conditions on the site were not going to support a commercial building.

[65] The Appellants failed to provide any evidence or express facts to contradict the 2015 soil report and the evidence of Mr. Lai, both of which concluded that the first 21 ft or so of soil on the Project were not suitable for backfill. In my view, Vallee J. had ample evidence to draw conclusions of fact about soil conditions on the Project lands. These factual findings supported her further conclusions that the inappropriate soil excavated from the site had to go somewhere, namely, trucked off site.

[66] I would therefore dismiss this second ground of appeal.

Issue 3

[67] The Appellants’ complaint about this aspect of the costs decision of Vallee J. was based on her decision to order that ongoing storage costs of the Ferrari, which was originally supposed to compensate Villano, would be shared between Villano and Daytona Auto Centre Ltd. until Villano’s judgment was paid in full. The argument focuses on the alleged unfairness of Villano being permitted to keep the car as security for payment of the trial judgment, while at the same time only having to pay half the costs of storage. The Appellants argue that Villano’s judgment is properly secured, as it can be supported by a writ of seizure and sale and bears post judgment interest.

[68] The decision to provide ownership of the Ferrari to Villano was a unique approach to compensation of a construction site supervisor. The fact that a dispute about that compensation has led to other unique remedies is not surprising in context. I was not persuaded that splitting the storage fees was an unfair application of the trial judge’s discretion concerning costs. The decision to have the Ferrari act as a storehouse of value to compensate Villano was a mutual decision, at least before the litigation started. A dispute arose, and the car had to go somewhere until the litigation was resolved. I assume it is with a third party to protect against further misconduct accusations by either Villano or Daytona Auto Centre Ltd. with respect to preservation of the vehicle.

[69] I see it as a proper application of the trial judge’s discretion to apportion ongoing storage costs as she did. I would not give effect to this third ground of appeal.

Costs of the Appeal

[70] While the parties were unable to agree on the issue of costs, counsel gave “ballpark” figures at the end of submissions for what they thought would be appropriate partial indemnity costs. In my view, the Respondents have been wholly successful on this appeal. That said, I did see some merit in the submission of the Appellants’ counsel’s that those retained on the appeal for the Respondents were also trial counsel. Consequently, they would be most familiar with the issues raised on appeal and have less than usual preparation costs. Appellants’ counsel suggested that costs of $75,000.00, split three ways, $25,000.00 each inclusive of HST, disbursements and costs be payable forthwith by his clients in the event the appeal was dismissed. I see payment of $99,000.00 inclusive of HST and disbursements as a more reasonable and appropriate amount of partial indemnity costs in the circumstances.

[71] On the day this appeal was argued, the Divisional Court docket contained reference to a motion being argued conjunction with this appeal. No such motion was argued. I understood the motion involved identifying appeal routes for this case. The consolidated action involved a lien claim, where appeal lies by statute to the Divisional Court. The fraud claims, because of the amounts at issue, would have ordinarily gone on appeal directly to the Ontario Court of Appeal. I understand that there was a motion to the Ontario Court of Appeal to determine the appropriate appeal venue, and that the Court of Appeal remitted the matter back to this Court. Therefore, there is no need to address any motion before this Court. If there was a separate motion before this panel, it is dismissed without costs.

[72] Order to go dismissing the appeal of the judgment of Vallee J. with costs payable jointly and severally forthwith by the Appellants, 222595 Ontario Ltd and Daytona Auto Centre Ltd. as follows:

a. $33,000.00 inclusive of HST and disbursements to 1814219 Ontario Inc. cob as UM Construction;

b. $33,000 inclusive of HST and disbursements to Frank Murdocca, Murdocca Corporation and Waldorf Construction Inc.; and

c. $33,000 inclusive of HST and disbursements to Giuseppe Villano.

Fitzpatrick J.

I agree I agree

O’Brien J.

Cullin J.

Released: October 4, 2024