COURT FILE NO.: 07-CV-333730

DATE: March 26, 2012

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

D’URZO DEMOLITION INC.

L. Finegold, for the plaintiff

Fax: 416-597-3370

Plaintiff

• and -

DAMARIS DEVELOPMENTS INC.

T. Rotenberg, for the defendant

Fax: 905-475-7851

Defendant

HEARD: May 5 and 6, 2011 and December 1 and 2, 2011

Master C. Albert

[1] D'Urzo Demolition Inc. (“D’Urzo”) is a demolition contractor. Damaris Developments Inc. (“Damaris”) is a corporation created to hold title to 3035 Weston Road, Toronto (“3035”). Damaris conducts business through a joint venture of two experienced developers: The Goldman Group (“Goldman”) and The Conservatory Group (“Conservatory”). Damaris contracted with D’Urzo to demolish the structures on 3035 and crush concrete to stone.

[2] D’Urzo got caught in the middle of a dispute between the two joint venture partners over the size of crush. Conservatory accuses Goldman of inadvertently omitting “/4” from the job specifications and putting the job out to tender based on a crush size of three inch minus (“3” minus) instead of three-quarter inch minus (“¾”minus) [^1]. The project stalled while Damaris tried to resolve the issue of crush size. Damaris did not pay D’Urzo’s fourth progress draw so D’Urzo demobilized and ceased work.

[3] D’Urzo registered a construction lien for $202,002.90 on March 23, 2007 claiming payment for materials and services supplied. Subsequently Damaris made partial payments. At the time of trial the outstanding amount that D’Urzo claims is $85,808.95. Damaris claims set-off of $162,742.13 to complete the work.

[4] The issues are:

1. The scope of work required by the contract:

a. Which scope of work document, if any, applies?

b. Was demolition of asphalt included in the price?

c. Was Damaris entitled to require D’Urzo to reduce the size of crush for the same price?

d. Does the contract price include D’Urzo removing asphalt off site and crunching, crushing and disposing of imported materials?

2. Which party breached the contract?

3. What backcharges are owing to Damaris? and

4. Was the lien registered in time?

1. The contract

[5] By letter of July 8, 2005 Jo-Anne Azzarello, Goldman’s V.P. Marketing and Sales at the time, invited bids to demolish an existing factory building and related installations at 3035, the King Coil site. In her letter she referred to several documents including one identified as “Scope of Work”. Ms Azzarello was not called as a witness because Damaris could not locate her.

[6] Three contractors bid for the job. On July 14, 2005 Priestly Demolition Inc. quoted $982,000.00 plus GST, including crushing to three inch minus. On July 20, 2005 Greenspoon Specialty Contracting Ltd. quoted $1,635,000.00, including crushing but without specifying the size of crush.

[7] D’Urzo bid $523,525.31 on July 20, 2005 including crushing concrete on site but without specifying the size of crush.

[8] Damaris did not accept any of the bids and invited new bids. On April 7, 2006 D'Urzo quoted $630,000.00, providing a price breakdown that included $56,500.00 to “crush concrete to required gradation” without specifying the size of crush.

[9] D'Urzo's bid was significantly lower than the competing bids and Damaris awarded the contract to D’Urzo. On June 2, 2006 D’Urzo executed the Letter of Intent dated May 30, 2006, drafted and signed by Damaris, requiring the parties to execute a contract using the CCDC2 form, incorporating by reference: “The General Scope of Work document prepared by The Goldman Group July 8th, 2005”. It is not clear which version is the one referred to in the Letter of Intent.

[10] The parties executed a CCDC2 form of contract dated May 30, 2006 (the “CCDC2”). Presumably it was executed at the same time or shortly after the Letter of Intent. It incorporates the scope of work document by reference as a contract document but no such document was attached to the CCDC2. The evidence is unclear as to which version is the one incorporated into the CCDC2.

[11] In issue are the scope of work, whether the contract price includes demolition of asphalt, the size of crush required and whether D’Urzo was required to remove asphalt off site.

(a) Scope of work document

[12] The evidence as to whether a scope of work document was actually provided to D’Urzo conflicts. Nick D'Urzo, president of D’Urzo, testified that he never received it. Jeremy Alter, Goldman`s construction manager, testified that it was provided. Mr. Alter was not a Goldman employee at the time and has no direct knowledge. His evidence is based on finding a scope of work document in a file and assuming that it was provided to D'Urzo.

[13] Two scope of work documents were submitted in evidence. Both describe the materials to be crushed. One specifies the size of crush required. If Goldman provided a scope of work document to D’Urzo with the July 8, 2005 letter the question is: which version was provided for the purpose of quoting on the job? Again, the evidence conflicts.

[14] Neither scope of work document is dated. Both scope of work documents require the contractor to “Demolish and remove all Buildings including... all bollards, curbs and asphalt paving.” and to “5. Dispose of all materials not suitable for backfill off site.”

[15] Reproduced below are excerpts of relevant portions of the two versions of the document with differences shown in italic font. The document produced at exhibit 1, tab 6 (“scope #1”) provides:

“4. All concrete removed to be crushed on site and used for backfill. [Subject to Engineers approval].

[16] The document produced as exhibit 1, tab 32 (“scope #2”) provides:

“4. All concrete removed to be crushed on site to 3” minus and used for backfill. [Subject to Engineer’s approval]. Balance to be stockpiled on site at location designated by owner.”

Schedule & cash flow: It is anticipated that the demolition will commence approximately April 2008.

[17] It is significant that scope #2 provides for a commencement date of April 2008, almost a year and a half after D’Urzo began its work at 3035. Mr. Alter admits that scope #2 is based on a template form used by Conservatory.

[18] Both scope documents specify that the crush is to be used for backfill. It is significant that scope #2 specifies that the crush is to be to 3” minus and that crushed concrete not used for backfill is to be stockpiled on site. Scope #1 is silent on size of crush and what to do with concrete not used for backfill.

[19] Nick D’Urzo testified that he did not receive a scope of work document at the time of bidding or at the time he executed the CCDC2. He also testified that he first saw scope #1 at a meeting in April 2006 and that he never saw scope #2 before it was produced by Damaris in preparing for trial[^2]. Later, in cross-examination, he changed his evidence to say that he first saw scope #1 in 2009. His memory is not reliable on this issue.

[20] I find that scope #2 could not be the document referred to in the July 8, 2005 Goldman letter or the CCDC2 because the work was intended to begin and in fact began in 2006, long before the start date specified in scope #2.

[21] The next question is whether Nick D’Urzo received scope #1 before executing the CCDC2. Mr. D’Urzo is an experienced contractor. He did not ask for a copy of the scope of work document before signing the CCDC2 notwithstanding that its terms were incorporated by reference into the Goldman letter and the CCDC2. I conclude that he must have received it and is bound by its terms.

(b) Was demolition of asphalt included in the price?

[22] Whether demolition of asphalt was included in the contract price is also in issue. The scope of work document requires the contractor to “demolish and remove…curbs and asphalt paving”.

[23] The D’Urzo quote that was accepted by Damaris did not itemize “curbs and asphalt paving” as included in the contract price. The question is whether omitting those words from the D’Urzo quote relieves D’Urzo from including those items for the price quoted.

[24] The significance is twofold:

a) including paving in the crush changes the mix and could render the mix unsuitable for backfill, requiring additional work to remove it off site. Since D’Urzo was responsible for removing materials not suitable for backfill off site, whether or not asphalt paving was to be included in the demolition contract had a direct impact on the scope of work D’Urzo was required to do for the price; and

b) if demolition of asphalt paving was not included in the price then D’Urzo was entitled to an extra, if the work was done, and Damaris would not be entitled to a backcharge if it was not done.

[25] According to its terms the CCDC2 supercedes bid documents. I have already explained why scope #1 forms part of the contract. I therefore conclude that D’Urzo was required to demolish and remove asphalt paving on the 3035 site as an item included in the contract price.

(c ) Was Damaris entitled to require D’Urzo to reduce the size of crush to ¾” minus for the same price?

[26] Scope #1 is silent as to the size of crush. Stone crushed to 3" minus can be used as backfill. Damaris specified in scope #1 that the crush was to be used as backfill. Conservatory expected the crush to be ¾” minus so that the resulting crush could be used for road beds and other works besides backfill, which could save Damaris up to $240,000.00 in the cost of aggregate.

[27] Conservatory’s position is that if Goldman put the job out to tender at 3” minus it was Goldman's mistake, but in any event the cost to a contractor to crush to ¾” minus instead of 3” minus is the same. In a March 2, 2007 email from Mr. Alter of Goldman to Mr. Libfeld of Conservatory Mr. Alter acknowledges that a decision was made to change the size of crush and the increased cost to crush is a legitimate extra. This evidence corroborates that the size of crush required by the CCDC2 was 3” minus.

[28] According to D’Urzo the size of crush was critical to the price quoted. Before bidding on the job D’Urzo obtained a quote from its proposed crushing subcontractor to crush concrete to 3” minus. The Damaris witnesses admit that in all their discussions with D’Urzo prior to January 2007 the parties proceeded on the understanding that the size of crush required by the contract was 3” minus. Mr. Alter and Mr. Eadie, testifying on behalf of Damaris, admit that it was not until January 2007 that Damaris began to talk to Nick D’Urzo about using a smaller size of crush. The competing Priestly quote[^3] refers specifically to crushing all concrete, brick and asphalt stockpiled on site to 3” minus.

[29] If Conservatory is correct that Goldman made a mistake when it put the job out to tender specifying a crush size of 3” minus instead of ¾” minus then it is an issue as between the two joint venture partners. D’Urzo is not responsible for the cost of the mistake. I find that the contract called for D’Urzo to crush to 3” minus.

[30] Should D’Urzo have crushed to ¾” minus for the same price in the absence of a change order authorizing the change and an extra to the price?

[31] The quote D’Urzo received from its proposed crushing subcontractor, Robert E. Young Construction Ltd., before bidding for the contract was $3.80 per tonne to crush concrete to 3” minus. D’Urzo relied on that quote when it set its price in bidding the job.

[32] Mr. D’Urzo’s evidence is that Mr. Young (now deceased) could not crush to ¾” minus for the same price because he would need different machinery and required a surcharge of $3.25 per tonne. Damaris was not prepared to pay an extra to crush to ¾” minus instead of 3” minus. Mr. D'Urzo suggested to Damaris that it contract out the crushing separately and deduct the component of the price that had been allocated to crushing from the D’Urzo contract price. That did not happen.

[33] Damaris produced evidence from contractors who had worked for Conservatory in the past that the cost of crushing was the same whether the stone was crushed to 3" minus, 2" minus or ¾" minus. Conservatory is a major client of GAP Waste Management Inc., supplying 25% of GAP’s business for the past 17 years. On March 22, 2007 Joseph Guglietti, president and owner of GAP, provided a quote to crush concrete on the Damaris site. GAP quoted $4.65 per tonne for approximately 25,000 tonnes regardless of whether the size of crush was 3” minus, 2” minus or ¾” minus. The quote is based on information provided to GAP from an unidentified subcontractor. Mr. Guglietti does not specify the machinery to be used.

[34] On March 23, 2007 Stacy King, general manager of Strada Crush Limited, provided a quote to Conservatory to crush approximately 25,000 tonnes of concrete. He quoted $5.00 per tonne regardless of whether the size of crush was 3” minus, 2” minus or ¾” minus. Mr. King testified that to crush the concrete he would use a 5165 Lippmann primary impact crusher, which can crush up to 350 tonnes per hour regardless of the size of stone being crushed. He testified that the size of crush is irrelevant to the pricing when he uses the Lippman 5165 crushing machine.

[35] Both of the crushing contractors relied on by Damaris run much larger operations than the crushing subcontractor upon whose quote D’Urzo relied in bidding the contract. Had D’Urzo subcontracted for one of those contractors to carry out the crushing the contract price would have been higher. In fact, the two other bidders submitted significantly higher quotes for the work: Priestly’s quote is 50 per cent higher and Greenspoon’s quote is roughly 75 percent higher. One reason that D’Urzo was able to keep its quote low was that the job specifications allowed D’Urzo to use a smaller subcontractor to crush concrete.

[36] Nick D’Urzo’s response to the evidence of the quotes submitted by Damaris is that the volume of materials to be crushed was 13,000 tonnes, not 25,000 tonnes, based on Mr. Eadie’s February 9, 2007 communication. He suggests that the contractors quoting on a job of double the volume were able to offer a volume discount in the per tonne pricing. The actual invoice submitted by Damaris in support of its backcharge claim shows that Straa crushed 19,898.50 tonnes of material.

[37] The real issue is whether D’Urzo was required to crush to ¾” minus for the same price. His quote had been based on pricing from a small crushing subcontractor who did not own the sophisticated equipment of the larger crushing contractors capable of crushing to ¾” minus. The equipment owned by the subcontractor was capable of crushing to 3” minus. D’Urzo’s subcontractor would have had to rent equipment, thus the higher price. GAP and Strada, on the other hand, are larger contractors and have access to larger equipment. Their overall price is higher but their machinery is more versatile. By relying on the contract specification of 3” minus and basing his pricing on using a small contractor capable of meeting the specifications D’Urzo kept its price low.

[38] Damaris could have resolved the impasse by contracting out the crushing and deducting that component from the D’Urzo contract price. Instead Damaris refused to pay D'Urzo's fourth progress draw of $120,561.75. Unpaid, D'Urzo was not prepared to continue and left the job.

[39] I find that the contract was for a crush of 3" minus. The price to D’Urzo to crush to ¾” minus is not the same as to crush to 3” minus. The CCDC2 requires all extras to be negotiated. D’Urzo was entitled to charge extra to crush to ¾” minus. Damaris was not entitled to unilaterally require D’Urzo to crush to ¾” minus for the contract price.

[40] In the absence of a written authorization for crushing to ¾” minus for an agreed upon extra price D’Urzo was not required to crush to ¾” minus.

(d) Does the contract price include D’Urzo removing 3035 asphalt off site and crunching, crushing and disposing of imported materials?

[41] In its claim for backcharges Damaris asks for $50,000.00 to truck asphalt off site, on the basis that the contract requires D'Urzo to remove from the site asphalt that was not used for backfill.

[42] D’Urzo’s obligations under the 3035 contract include:

a) to “demolish and remove all buildings including ... curbs and asphalt paving”;

b) “All concrete removed to be crushed on site and used for backfill”; and

c) “Dispose of all materials not suitable for backfill off site”.

[43] Damaris’ position is that “remove” must be given its ordinary meaning and argues that it means removal off site. D’Urzo argues that “remove”, in the context of the contract, means that the curbs and asphalt paving must be removed from the structure that is being demolished and stockpiled elsewhere on site.

[44] According to the Concise Oxford Dictionary, 10th edition, “remove” means “taken off or away from the position occupied”. The ordinary meaning of “remove” could support the interpretation advanced by either party. Understanding its meaning in the CCDC2 requires an examination of the context in which it is used.

[45] I find it significant that where the intention is to remove materials off site the language used in scope #1 is “dispose of…off site”. By implication this suggests that where the language used is “remove” it does not go so far as to require the materials to be disposed of off site.

[46] It is not disputed that the parties intended that concrete removed from the structure be crushed and used for backfill. The contract specifies that only materials not suitable for backfill, or in excess of what is required for backfill, be disposed of off site. I conclude that the contract did not require asphalt to be removed off site unless it was unsuitable for use in the concrete mix that would be used for backfill.

[47] The City of Toronto restricts to 20 percent the component of asphalt permitted in crushed stone used for backfill and other purposes. The parties acknowledge that the asphalt on the original 3035 site, mixed with the demolished materials generated solely from the 3035 site, would not have exceeded the 20 per cent threshold. Consequently the asphalt could have been used in the crushed concrete mix and would have been suitable for use as backfill. It should not have been necessary to truck asphalt away from 3035.

[48] The issue is complicated by Conservatory importing to 3035 materials demolished from another of its development sites, the WSIB site. Imported materials included large chunks of concrete that had to be “crunched” to smaller chunks before it could be crushed, as well as asphalt. Damaris did not give D'Urzo notice that it would be importing materials to 3035 and D’Urzo learned of it from workers on site who questioned the arrival of truckloads of demolition materials. D'Urzo attempted to keep the dumped materials segregated from the 3035 materials. It is not in dispute that the CCDC2 did not require D’Urzo to crunch and crush imported materials and dispose of excess imported materials off site. Unfortunately Damaris’ forces caused the materials to become co-mingled.

[49] By Damaris allowing Conservatory to dump additional materials from the WSIB site and co-mingle it with materials on the 3035 site, the mix exceeded the 20 per cent threshold suitable for backfill. As a result asphalt had to be trucked off site. Damaris asks the court to award a backcharge for removing asphalt off site.

[50] The CCDC2 only requires D’Urzo to dispose of asphalt off site if it could not be used for backfill. Had Conservatory not imported materials from the WSIB site the asphalt removed from the structures on the 3035 site could have been incorporated into the crush and there would have been no need for D’Urzo to remove asphalt off site. I find that Damaris caused the need to dispose of asphalt off site and is responsible for the cost. No backcharge is allowed.

2. Which party breached the contract?

[51] Damaris received D’Urzo’s October 31, 2006 invoice for the fourth progress draw in early December 2006. Damaris did not pay the invoice because it was reconsidering the size of crush. Mr. Alter was satisfied that D’Urzo had completed the work required for the progress payment and promised to pay Mr. D’Urzo. Mr. Alter could not get Mr. Libfeld of Conservatory (the joint venture partner funding the project) to sign the cheque.

[52] Throughout most of February 2007 while the parties discussed the issue of changing the size of crush from 3” minus to ¾” minus Damaris held out to D’Urzo that it would be paid. One example is a meeting held on February 13, 2007 to which Mr. Alter had promised to bring the cheque. He did not.

[53] D’Urzo could not proceed with the crush component of the contract until Damaris finalized its position as to size of crush and whether it would pay for the change as an extra.

[54] When it became apparent to Nick D’Urzo that Damaris was not going to pay the fourth progress payment draw or authorize an extra for the change in specifications Nick D’Urzo had to make a decision: should he proceed with the crush at 3” minus and continue investing time and resources at the risk of not getting paid, or should he leave the job? He decided to demobilize and leave the site. The abandonment occurred at the moment in time that D’Urzo abandoned any intention to return to complete the work.

[55] Damaris argues that D’Urzo’s abandonment constitutes breach of the contract because D’Urzo failed to give Damaris five days notice as required by the CCDC2. I disagree. CCDC2 clause 7.2.3 provides that the contractor “may” notify the owner in writing that the owner is in default of its obligation to pay. The section is not mandatory. It is permissive and provides for specified damages if notice is given, some of which may not be available without giving the five day notice. D’Urzo did not provide the written notice and is not claiming damages other than the balance of the contract price less the component of the contract work that it had not yet completed. Failure to give the notice that is contemplated by the CCDC2 only goes to the type of damages D’Urzo is entitled to claim. It does not override D’Urzo’s common law right to abandon for non-payment and claim the balance of the contract price less the cost of contract work not yet supplied.

[56] In the face of a contract that provides for progress payments based on the percentage of completion of the contract work, as was the case here, and in the absence of a dispute over the percentage of completion claimed, a contractor is not required to continue to pay out of its own pocket for workers and machinery to continue to supply materials and services to a delinquent owner. I find that the breach of contract occurred when Damaris failed or refused to pay what was owing to D’Urzo under the contract. D’Urzo was entitled to treat the contract as at an end and be paid the full contract price less the component of the contract that it had not yet completed.

3. Backcharges

[57] Damaris claims completion costs of $162,742.19 made up of:

a) $50,400.00[^4] paid to B. Gottardo Construction Ltd. to remove asphalt;

b) $104,467.13[^5] paid to Strada Crush to crush concrete on site to ¾” minus; and

c) $7,875.06[^6] paid to Strada Crush to demolish and remove the remaining concrete.

(a) Backcharge #1: removing asphalt

[58] For reasons previously stated removing asphalt paving and stockpiling it on site was included in the scope of work that D’Urzo was required to perform for the contract price. D’Urzo’s position is that the component of the price allocated to removing asphalt is $2,643.75. The estimate was provided by Nick D’Urzo and is based solely on personal experience. DÙrzo provided no independent quote or valuation for this item.

[59] Damaris claims $50,400.00 as a backcharge for removing asphalt, based on what it paid Gattardo. The Gottardo invoice includes not only removing asphalt from its location at 3035 but also disposing of asphalt off site. For reasons already stated the D’Urzo contract did not require D’Urzo to dispose of asphalt off site. The scope of work Gottardo performed and Damaris claims as a backcharge goes beyond the work required by the D’Urzo contract and is consequently not a proper completion costs. The invoice does not separate out the cost of removal from the cost of disposing off site.

[60] I accept D’Urzo’s estimate of $2,643.75 as the value of removing and stockpiling asphalt because (i) the scope of work did not include disposing of asphalt off site; (ii) the onus is on Damaris as the party claiming a backcharge to prove the value of the claim; and (iii) Damaris failed to provide an estimate that separates out the value of removing and stockpiling asphalt from the cost of removing and disposing of asphalt off site.

(b) Backcharge #2: crushing concrete

[61] Damaris claims $104,467.13 as a backcharge for crushing concrete to ¾” minus, relying on the August 31, 2009 invoice from Strada. The invoice is for crushing 19,898.50 tonnes of concrete at $5.00 a tonne.

[62] Damaris acknowledges that this invoice includes crushing materials imported from the WSIB site and that the CCDC2 did not require D’Urzo to crush imported materials. Damaris provides no calculation to apportion the invoice as between crushing the 3035 materials and crushing the imported WSIB materials, but relies on evidence of the number of truckloads of materials imported and the void ratio for purposes of calculating the weight of the imported materials included in the Strada invoice for crushing.

[63] D’Urzo had no notice of Damaris’ intention to import materials from the WSIB site so it was unable to accurately record the weight and mix of materials imported from the WSIB site. D’Urzo relies on the observations and recollection of site workers. The evidence of how many truckloads of demolition materials Damaris imported from the WSIB site and dumped on 3035 conflicts. Nick D’Urzo estimates the weight of materials imported in 2006 as 2,000 tonnes and in 2009 as 2620 tonnes for a total of 4,620 tonnes of imported materials. His estimate is based on “eyeballing” the structures and is not reliable or accurate.

[64] Nor does Damaris have any reliable records of the weight of the imported materials. Damaris estimates the materials imported in 2006 as 2,078 tonnes and the materials imported in 2009 as 746 tonnes for a total of 2,824 tonnes of imported materials. These measurements are based on truckloads of materials removed off site by another contractor, not on the measure of imported materials. At trial Damaris admitted that it ought to have had its contractor record the weight of the imported materials separately. As the party claiming a backcharge the onus is on Damaris to prove liability and quantum.

[65] Accepting and deducting D’Urzo’s estimate of 4,620 tonnes of imported materials from the Strada invoice for crushing at the per tonne price of $5.00, Damaris paid Strada $76,3912.50[^7] to crush the 3035 concrete to ¾” minus.

[66] Damaris’ position is that Strada’s charge for crushing is the same whether crushing to 3” minus or ¾” minus. On that basis its position is that the backcharge is the same even if the court finds that the contract called for crushing to 3” minus.

[67] D’Urzo’s position is that the contract called for crushing to 3” minus and that the cost to crush to ¾” minus would have been an extra. For reasons already stated I agree with D’Urzo on this issue.

[68] D’Urzo’s position as to calculating the appropriate backcharge for crushing is to deduct the component of the D’Urzo contract allocated to crushing. The evidence as to quantum allocated to crushing is firstly the worksheet that Nick D’Urzo used to prepare D’Urzo’s quote[^8] and secondly the breakdown that accompanied each invoice that D’Urzo submitted to Damaris for progress draws[^9]. Damaris never questioned the allocation of values that D’Urzo attached to the various components of the contract price. If Damaris believed that D’Urzo had not allocated enough of the contract price to crushing then it would have challenged the percentage completion claimed on the basis that D’Urzo was overstating the percentage completion, not having yet commenced crushing. By not challenging that breakdown at the time the invoices were submitted and the first three invioces were paid Damaris admits that the value attached to the crushing component was appropriate.

[69] I prefer D’Urzo’s evidence as to the value of the completion cost for crushing. Damaris’ evidence includes imported materials and is based on crushing to a different size than what was called for by the contract. I do not accept Damaris’ position that there would have been no increased cost to D’Urzo to reduce the size of crush to ¾’ minus.

[70] For these reasons I accept D’Urzo’s calculation of the value of the completion cost for crushing and allow $56,500.00 plus GST for a total of $59,890.00 as a backcharge.

(c ) Backcharge #3: remove remaining concrete

[71] When D’Urzo left the job a portion of the concrete slab and foundation at 3035 had not yet been determined. It had been used as a platform for the crushing machinery and for stockpiling materials. Nick D’Urzo acknowledges that the contract required D’Urzo to demolish this concrete and estimates that portion of the contract as $3,000.00 plus taxes, without providing an explanation or breakdown of this estimate.

[72] Damaris claims $7,500.00 plus GST for a total of $7,875.00 as a backcharge for this work relying on Strada’s invoice dated March 9, 2009.

[73] I accept Damaris’ evidence on this point as more reliable because it is the actual cost of removing the remaining concrete slab and foundation that was left in place as a platform for the heavy machinery and materials. A backcharge of $7,950.00 is allowed.

4. Did D’Urzo register the lien in time?

[74] D'Urzo did not keep a site log. According to Nick D’Urzo’s his workers performed work on site up to March 1, 2007, on which date they were condensing concrete piles to facilitate the crushing of concrete. Ralph D’Urzo claims to be the last person to work on site but produced no corroborating evidence such as time sheets or site logs to that effect. Damaris' position is that D'Urzo performed no actual work on site after January 8, 2007. Mr. Alter is not aware of the last date of work or when D'Urzo removed its equipment from the site. I am not satisfied that D’Urzo has met the onus of proving that the actual supply of materials and services continued through to March 1, 2007.

[75] Damaris admits that it did not pay D'Urzo the fourth progress draw of $120,561.75. Throughout the month of February 2007 D'Urzo was reassured by Mr. Alter that payment was forthcoming. Physical work on site was stalled because of the stalemate on the size of crush. D'Urzo was prepared to proceed based on the contract specifications of 3” minus, or based on a revised specification to ¾” minus if the parties could agree to a price for the extra, or based on excising that portion of the work from the contract.

[76] D’Urzo did not abandon the contract during the negotiation period but maintained an intention to proceed with the contract work upon resolving the crush issue. However, as is clear with the benefit of hindsight, Damaris was in no hurry to complete the crushing. In fact Damaris did not proceed with crushing for two years. On or about February 26, 2007 D’Urzo decided not to continue with the contract because Damaris had not paid the fourth progress draw and D’Urzo feared that Damaris would not pay.

[77] Damaris argues that the last work performed was on January 8, 2007 and the lien was registered more than 45 days after that date, making it out of time. D’Urzo argues that it did not abandon the contract when the issue of crushing to a smaller size arose. Rather, D’Urzo’s position is that it was negotiating payment for the change in scope of work and intended to continue the contract once the parties resolved the issue.

[78] Abandonment requires a cessation of work and an intention not to complete the contract. If D'Urzo registered its lien within 45 days of forming the intention not to continue the contract work then the lien was preserved in time[^10]. I find that D’Urzo formed the intention not to continue and abandoned the contract on February 26, 2007 when Nick D’Urzo gave up hope of successfully resolving the issues of payment and size of crush.

[79] D’Urzo preserved its lien by registering a claim for lien on March 23, 2007 as Instrument No. AT1404121 and perfected its lien by issuing a statement of claim on May 28, 2007, in compliance with section 36 of the Construction Lien Act.

[80] I find that Damaris breached the contract when it failed to pay D’Urzo the overdue fourth progress draw by the date that it was due[^11]. D’Urzo was entitled to treat the contract as at an end. D’Urzo abandoned the contract with cause on or about February 26, 2007 when it formed the intention not to continue because of non-payment. I find that the lien was preserved and perfected in accordance with the requirements of the Construction Lien Act.

5. Calculation and Conclusion

(a) Calculation

[81] Damaris breached the contract by not paying D’Urzo. As the innocent party D’Urzo is entitled to the full contract price less the component of the contract that it did not complete.

[82] The contract price is $630,000.00 for the contract plus $4,068.20 for the demolition permits plus GST at 6% for a total contract price of $672,112.29.

[83] D’Urzo issued five invoices, some of which Damaris paid. After the litigation began Damaris made additional payments. The amounts invoiced, payments made and proven backcharges are summarized in the chart below:

Contract Amount

Invoiced

Paid

Backcharge

Balance

Contract and progress payments:

CCDCC2

$630,000.00

$630,000.00

Extra (permit)

4,068.20

634,068.20

Taxes (6%)

38,066.09

672,112.29

Invoice 1

$143,100.00[^12]

$ (143,100.00)

529012.29

Invoice 2

114,480.00[^13]

(114,480.00)

414,532.29

Invoice 3

152,640.00[^14]

(152,640.00)

261,892.29

Invoice 4

120,561.75[^15]

Invoice 5 (demolition permits)

4,312.29[^16]

Invoice 6

17,529.75[^17]

Post lien payments:

July 7, 2010

(99,149.96)

162,742.33

Dec. 2010

(10,911.65[^18])

151830.68

April 2010

(150.00)

151,680.68

Backcharges:

Asphalt stripping

$ (2,643.75)

149,036.93

Complete demolition of concrete slab and foundation

(7,875.00[^19])

141,161.93

Crush to 3” minus

(59,890.00[^20])

$81,271.93

[84] Taking into account the full contract price of $672,112.29, payment of progress draws 1, 2 and 3, additional payments that total $110,211.61[^21] made after the lien was registered, and proven backcharges of $70,408.75, I find that Damaris must pay D’Urzo $81,271.93.

(b) Conclusion

[85] This court finds that Damaris must pay $81,271.93 to D’Urzo, failing which D’Urzo is entitled to its lien remedy against the land or against security in place of the land, if posted.

[86] If counsel are unable to agree on costs and the form of the final report they may contact my assistant to schedule an appointment for a return date no later than May 15, 2012 to make submissions on costs and to settle the final report.

Master C. Albert .

Released: March 26, 2012

COURT FILE NO.: 07-CV-333730

DATE: March 26, 2012

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

D’URZO DEMOLITION INC.

Plaintiff

• and -

DAMARIS DEVELOPMENTS INC.

Defendant

REASONS FOR JUDGMENT

Master C. Albert

Released: March 23, 2012

[^1]: See: email March 1, 2007 from Shelley Libfeld to Jeremy Alter

[^2]: D'Urzo affidavit, exhibit 1, paragraph 20

[^3]: exhibit 1, tab 25

[^4]: $48,000.00 plus GST

[^5]: $99,492.50 plus GST

[^6]: $7,500.00 + GST

[^7]: (19,898 tonnes - 4,620 tonnes) x $5.00 = $76,392.50

[^8]: Exhibit 1, tab 5

[^9]: Exhibit 1, tabs 12, 15, 16 and 17

[^10]: Section 31(2)(a)(ii) of the Construction Lien Act.

[^11]: Based on Damaris’ evidence that it received the invoice in early December 2006 payment was due by mid-January at the latest.

[^12]: $150,000.00 for materials and services less 10% holdback plus GST at 6% of $8,100.00

[^13]: $120,000.00 for materials and services less 10% holdback plus GST at 6% of $6,480.00

[^14]: $160,000.00 for materials and services less 10% holdback plus GST at 6% of $8,640.00

[^15]: $126,375.00 for materials and services less 10% holdback plus GST at 6% of $6,824.25

[^16]: $3,336.00 plus $732.20 for the permits plus GST at 6% of $244.09

[^17]: $18,375.00 for materials and services less 10% holdback plus GST at 6% of $992.25

[^18]: $10,391.67 + $519.98

[^19]: $7,500.00 + GST at 5% of $375.00

[^20]: $56,500 + taxes @ 6%

[^21]: $99,149.96 paid July 7, 2010, $10,911.65 paid in November or December 2010 and $150.00 paid in April 2011.