ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-08-0248-00
DATE: 20120412

BETWEEN:

SIERRA EXCAVATING ENTERPRISES INC. Plaintiff – and – PETER LEON OLSZEWSKI, MARIA CORNELIA OLSZEWSKI Defendants

J. Cosentino, for the Plaintiff
S. Balpataky, for the Defendants

HEARD: January 17-19, 2012

MILLER, J.

[ 1 ] Sierra Excavating Enterprises Inc. claims a declaration that it is entitled to a lien under the Construction Liens Act, R.S.O. 1990, c.C.30 as amended. Sierra claims $14,576.13

[ 2 ] Sierra is a construction contractor which performed work at 15665 Centreville Creek Road, Caledon, Ontario from August through November 11, 2007 at the behest of the owners of the property, Peter and Maria Olszewski. Sierra claims it is owed $14,576.13, plus interest and costs pursuant to its agreement with Mr. and Mrs. Olszewski for which it has not received payment. The Toronto Dominion Bank held a mortgage on the property at the time the work was performed and thereafter and was a Defendant to the action. The claim against the Bank has been settled.

[ 3 ] Peter and Maria Olszewski admit they were at all material times the joint registered owners of the subject property.

[ 4 ] Peter and Maria Olszewski assert that the work done by Sierra was not done in accordance with their agreement and that Sierra caused further damage to their property. They counterclaim in the amount of $40,000 plus costs, being the cost of having the work redone plus repairing additional damage caused by Sierra.

[ 5 ] There is no dispute that the Olszewskis paid a $5,000 deposit and that the amount owing to Sierra, if they had done what they contracted to do, would be $14,576.13.

Testimony of Domenic Scrivo

[ 6 ] Domenic Scrivo is the owner and president of Sierra Excavating Enterprises Inc. which has been in business 25 years. The business involves excavating, site services, grading and waterproofing. Mr. Scrivo testified that his business has been involved in many significant waterproofing projects, including a municipal water reservoir and another home just south of the subject property.

[ 7 ] Mr. Scrivo testified he was initially contacted by Peter Olszewski in response to an advertisement in a local newspaper. Mr. Olszewski asked for an estimate and Mr. Scrivo attended at their home. He testified that he immediately noted that the grading was above the brick line on the home, which would prevent proper “breathing”. He noted a mouldy smell as he entered the home, and testified that he was shown two wet spots in the basement - one in the northwest corner and another under a window on the east side of the house.

[ 8 ] Mr. Scrivo testified that the blocks of the basement walls were all discoloured and had a white powdery appearance which Mr. Scrivo described as calcium residue from water coming through the blocks.

[ 9 ] Mr. Scrivo proposed an excavation of the west, north and east sides of the house to the footings, to scrape and wash the walls, to re-parge (a thin cement covering) and re-tar the walls, to install a membrane and new weeping tiles. Rough grading and the building of an 80 foot swale, leading away from the house on the west side would be included. Mr. Scrivo also quoted for the installation of an outside landing and stairs from the basement door on the East side.

[ 10 ] Certain items were excluded on the quotation, dated April 5, 2007, located at Exhibit # 1(a) Tab 3. It was left to the Olszewskis to obtain a building permit and among the items excluded was “fine grading and landscaping”. Mr. Scrivo testified that he explained that there would be significant settling of the rough grading he would do. He testified that he told the Olszewskis to expect at least one metre of settling by the following Spring. He left two piles of fill to assist in the grading they would have to do later.

[ 11 ] In an exchange of e-mails at Exhibit # 4 Tabs 2 and 3, April 16, 2007 and May 11, 2007 certain questions asked by Mr. Olszewski were answered and Mr. Scrivo “threw in” two additional drainage pipes - one at the northwest corner and another leading from the new stairwell. Mr. Olszewski accepted the quote. The work was to begin in August 2007.

[ 12 ] Mr. Scrivo described the process which began August 7, 2007, starting with locating the hydro and telephone wires, excavating the three sides of the house, power washing and scraping the walls. Mr. Scrivo testified he was then called by his employees to look at the walls as they were in poor condition. He did so, together with Chris Reynolds of Simcoe Foundation, who advised that because of the hairline cracks in the blocks a standard parge and tar would not work.

[ 13 ] Mr. Reynolds suggested a waterproofing system involving Bakor 710 which Mr. Scrivo described as a fibreglass rubberized membrane; a lot more expensive than the process he had quoted to the Olszewskis but that came with a five year warranty. He advised Mr. Olszewski that this system it would cost an additional $3,500. Exhibit #11(a) is the August 12, 2007 quote from Simcoe to Sierra. Mr. Scrivo testified that after a couple of days Mr. Olszewski approved the $3,500 extra and gave him the “go ahead”. He testified Mr. Olszewski told him he had looked up the system on the internet.

[ 14 ] Mr. Scrivo testified that a couple of days later Simcoe did the work. He testified he came by the night after the waterproofing and drainage board had been installed. He testified that “we installed weeper with “socks” to prevent dirt getting in the pipe.”

[ 15 ] Mr. Scrivo then indicated the “Town” was called to inspect. Mr. Scrivo testified that town inspector came a second time after the stone was on the pipe and before the job was backfilled. Exhibit #1(b) is the Town of Caledon inspection report indicating that the footings and backfill had “passed” on August 10 and 21, 2007 respectively.

[ 16 ] Styrofoam insulation was part of Sierra’s initial quote, to be put on the outside of the walls before backfill. Mr. Scrivo noted in his testimony that the Olszewskis insisted on R10 insulation which was blue, as indicated in the quote, although Mr. Scrivo was prepared to put on R30 insulation – with a higher insulating value – but this type of insulation was not blue in colour.

[ 17 ] Mr. Scrivo testified that during the work the Olszewskis’ telephone line was broken by a shovel. Exhibit #1(a) Tab 5 is an invoice for $25.31 that Mr. Scrivo testified he paid to have the telephone line repaired. Mr. Scrivo testified that he became aware that the telephone line broke again when the earth settled and he offered to pay for that as well but Mr. Olszewski told him that he would have Bell Canada take care of it.

[ 18 ] Mr. Scrivo testified that Sierra backfilled the job using bucket compacting as he did not want to risk doing further damage to the walls by compacting further. He indicated they did compact with a “jumping jack” compactor near the hydro lines so as not to risk disturbance of the lines from settlement of the earth. Mr. Scrivo testified that a fill stockpile was left as per his initial quote diagram as well as another fill stockpile on the northwest corner of the house so that the Olszewskis could fill in the earth as it settled.

[ 19 ] Mr. Scrivo testified that Sierra also created a swale on the west side of the house 80-90 feet long to carry water away from the house toward the pond.

[ 20 ] The quote provided to the Olszewskis also included building steps and a landing to the back (east) door to the basement. Mr. Scrivo testified that Sierra framed two walls each 15 feet long. The footings for this were also inspected, he testified, by the Town of Caledon. Mr. Scrivo testified that his foreman advised him he had spoken to the Olszewskis with respect to the height of the walls, which was not up to a line Mr. Scrivo had painted on the wall of the house. Mr. Scrivo testified that he was told the Olszewskis were “OK” with that, before the concrete was poured. After the walls were constructed the stairs and the landing were completed. The foreman did not testify and this evidence was not admitted for its truth.

[ 21 ] Mr. Scrivo explained that the basement steps and corresponding walls were a “field fit” as at the time of his original quote he was unsure, given that at that time the positioning of the septic bed was unknown, how far out the steps would extend. That was why the quote indicates the size to be approximate. Mr. Scrivo testified that if the Olszewskis had been unhappy with the height of the walls they could have told him and he could have easily and inexpensively raised the walls to the desired height, provided they complied with the building code. Mr. Scrivo testified that there was enough money in the budget to adjust the height of the walls up or down.

[ 22 ] Mr. Scrivo explained that the mark he placed on the side of the house was to indicate to his workers that they must not exceed that height and was not an indication to the Olszewskis of how high the walls would be built. He testified that he did not hear any complaint about the height of the walls until three months after the fact. He acknowledged that Mr. Olszewski had told him that he would be doing landscaping later and he agreed “100%” that if the walls were higher the grading would be better with better water drainage.

[ 23 ] Mr. Scrivo testified that an invoice was sent to the Olszewskis August 20, 2007. He acknowledged receiving e-mails from the Olszewskis August 26, and August 27, 2011 indicating their basement continued to leak and they would not be paying until the problem was addressed.

[ 24 ] Mr. Scrivo testified that he went to see the Olszewskis one evening after receiving the e-mails and they told him they were concerned about some tree saplings that had been damaged during the work and that there was still water in the basement. Mr. Scrivo testified that following that on a Saturday he spent some three to four hours with Chris Reynolds present moving a hose along all three sides of the house to try to find where the leak into the basement was originating. He testified that he could see water coming in to the basement under the bottom windowsill on the east side and that they immediately repaired that with hydraulic concrete and that Mr. Reynolds had re-tarred it the next day. He testified that the water test revealed no more water coming into the house. He credited the Olszewskis with $900 against their bill to replace the saplings.

[ 25 ] Mr. Scrivo testified that he returned to the house the following Saturday and when Mr. Olszewski told him there was still a problem he did another hose test. Mr. Scrivo saw no water coming in through the spot that had been repaired and after 2-3 hours of water testing saw nothing in the basement. Mr. Scrivo testified that he told the Olszewskis that he could not fix something he couldn’t see. He told them “we’ll find it and I’ll fix it. I will dig the whole house up if I have to”.

[ 26 ] Mr. Scrivo testified that a few weeks later he called and Mr. Olszewski told him there was still water coming in. Mr. Scrivo returned when the Olszewskis were not home, but Mr. Olszewski had left the hose out for him. Mr. Scrivo testified that he did another hose test from 8:00 until lunchtime when the Olszewskis returned. While doing the test Mr. Scrivo used the fill he had left to re-grade where the earth had settled. Mr. Scrivo testified that he and Mr. Olszewski went into the basement and saw no water.

[ 27 ] Mr. Scrivo testified that following another call about water in the basement he returned to the house again with Chris Reynolds. After 3-4 hours of hose testing he got frustrated and threw the hose down on the verandah in the area of a crack in the concrete. He then heard Mr. Reynolds and Mr. Olszewski, who were in the basement, screaming “water, water!”. Mr. Scrivo then went into the basement and could see water coming in the same path and into the same puddle where there had been a leak in the northwest corner, in the cold room of the basement. He testified that everyone was relieved that they had found the problem but he was not instructed to fix the crack in the verandah so he packed up and left. Mr. Scrivo testified that he heard nothing further about the leak in the northwest corner.

[ 28 ] Mr. Scrivo testified that after waiting three to four weeks he called to get paid and the Olszewskis said, no, there was still water coming in by the window. He testified that he didn’t believe it. He testified that he did not know if he did another water test after that. He testified that he thought he went back and marked the stain below the East window with a pencil to see if it would change. It appeared to him to be exactly as before.

[ 29 ] Mr. Scrivo testified that Mr. Olszewski called to say his electricity was out and the electrician said the hydro wire had been pulled out. Mr. Scrivo testified that he offered to pay for a hotel for the Olszewskis to stay at while the hydro was out but they refused. Mr. Scrivo worked with the electrician the following day to excavate the hydro line and then backfill after it had been repaired. He testified that he did not go into the basement on that occasion. The invoice, Exhibit #4 Tab 11 is dated November 12, 2007. Mr. Scrivo testified that he accepted responsibility for the hydro wire pulling out as the earth around it had not been compacted sufficiently and the settling caused the line to pull out. Mr. Scrivo credited the full amount of the hydro repair - $2,684.87 – against the amount owing by the Olszewskis.

[ 30 ] Mr. Scrivo testified that he heard nothing after that but stopped in to the Olzsewskis’ in late November on the way to his son’s hockey practice. He testified that it had been raining heavily that day and for the previous 12 hours. He later testified that it had been raining heavily for a day and a half. Mrs. Olszewski let him into the basement. He testified that the mark he had drawn around earlier had not changed and there was not water. He noticed the Olzsewskis had a tarp covering the crack on the verandah. He testified that he gave up trying to get paid and registered a lien against their property.

...

[ 119 ] Having considered all of the evidence, I find that Sierra Excavating Enterprises Inc. failed to do what it contracted to do, which was to stop the Olszewski basement from leaking. It is clear the Olzsewskis relied on the expertise of Domenic Scrivo to do just that. I find that the work done by Sierra in fact made the problem worse, requiring the repair and redo that was completed by Peerless.

[ 120 ] In coming to these conclusions I have made a number of findings.

[ 121 ] I accept the evidence of the Olszewskis that Domenic Scrivo did not enter their basement to observe the areas of leakage before advising on the work to be done however I am not certain that Mr. Scrivo’s failure to do so is material.

[ 122 ] There is evidence that the Olszewskis accepted Mr. Scrivo’s quote because it was the least expensive and I find that Mr. Scrivo, on all of the evidence, was intent on completing the job as quickly and cheaply as possible. He did act responsibly in asking the advice of Mr. Reynolds and in the result the Olszewskis contracted to pay the extra amount for Mr. Reynolds’ work, bringing the job in line with the other quotes they had received.

[ 123 ] I accept as well that Mr. Scrivo acted responsibly in crediting the Olszewskis for the extra cost of repairing the damage done to the hydro lines due to settling. While I accept that the amount of settlement generally was “unusual” I am unsure if Sierra’s failure to use a method of compacting other than bucket compacting was related to the continued and new leaks in the Olszewski basement.

[ 124 ] Nonetheless I find that what Sierra Excavating Enterprises Inc. contracted to do was stop the leaks in the Olszewski basement. The preponderance of evidence supports a finding they did not.

[ 125 ] In coming to this conclusion I have considered that the Olszewskis did not complain to Mr. Scrivo, in writing or otherwise, about the leak in the northwest corner after they observed water coming apparently from the crack in the verandah. I note that Mr. Waisanen, on his inspection of the premises June 2, 2008 noted no leak and only old staining in that area. I conclude that it is more probable than not that there was no further leak in the northwest corner after Mr. Scrivo and Mr. Reynolds did the water testing on the verandah. Thereafter the crack in the verandah was covered by a tarp and ultimately repaired by concrete filler when Peerless did their work.

[ 126 ] The east wall of the basement is another story. I accept the evidence of the Olszewskis that the leak below the east window persisted even after Mr. Scrivo and Mr. Reynolds had done repairs within the window well. I find their evidence was supported by the photographic evidence as well as the observations and moisture measurement done by Mr. Waisanen on his inspection in June 2008.

[ 127 ] Further, I find that the leak on the east side of the basement in the area of the basement door did not exist before Sierra did its work. I accept the evidence of the Olszewskis, again supported by the photographic evidence and the observations of Mr. Waisanen that this substantial leak began after Sierra did its work.

[ 128 ] This finding is significant, because it supports the opinion of Mr. Gould that the problem was in the drainage system installed by Sierra. I do not find that it is necessary that I am able to ascertain the precise nature of the problem in the drainage system, as the evidence supports a common sense conclusion that the water was not draining properly on the east wall of the basement and instead was pooling in the area closest to the basement door.

[ 129 ] This was the opinion of Mr. Gould, based on his observations and years of experience. I want to make it clear that in coming to this conclusion I do not rely on Mr. Gould’s testimony about the hearsay statement of his employee to that effect.

[ 130 ] In coming to this conclusion I have considered the evidence of Mr. Reynolds that he looked at the drainage system and found that it appeared to have been done properly and that he would have done so before guaranteeing the work that Simcoe did.

[ 131 ] I have also considered the evidence that from Mr. Scrivo that the work was inspected by the Town of Caledon before the excavation was filled in. This is supported by Exhibit #1(b) which speaks to an inspection of the footings and the backfill. What this evidence does not show, however, is whether there was any inspection or testing of the weeping tiles and/or of the flow of water through the drainage system.

[ 132 ] I conclude that it is more probable than not that the drainage system installed by Sierra was done in a way that did not effectively stop the existing leak to the area under the east window and in fact caused the new leak in the area by the basement door. In this Sierra did not fulfill its contractual obligation.

[ 133 ] I have considered whether the way in which the walls of the basement stairs were constructed was a contributing cause of the problem. On all of the evidence I do not find that it was. Further, I accept the evidence that Mr. Olszewski had an opportunity to observe the walls being built and made no complaint in respect of the walls until he began this litigation. I accept the evidence of Domenic Scrivo that had the height of the walls been raised as an issue at the time they were being built they could have been raised by Sierra efficiently and inexpensively.

[ 134 ] I do not find that Sierra Excavating Enterprises Inc. failed to what it contracted to do in respect of the basement landing and stairs.

[ 135 ] I accept that the normal measure of damages in a case such as this is the excess cost of procuring substitute services and materials over the contract price as set out in the decision of Howden, J., relying on The Law of Damages, by S.M. Waddams (Canada Law Book/Cartwright Group Limited) at p.2-13(As at May 2009), in Simpson v. Hatzipetrakos 2009 CarswellOnt 5260 at paragraphs 23-24 .

[ 136 ] I have considered the argument of the Plaintiff that the work done by Peerless amounts to an improvement over what Sierra contracted to do. While I accept that the material and method used by Peerless may have been of superior quality to that used by Simcoe and Sierra, I also accept the evidence given by Mr. Gould that a complete redo was necessary for him to guarantee his work. Further, on the evidence before me, if there was an improvement in the waterproofing work it would be difficult if not impossible to quantify it.

[ 137 ] I do accept that the additional work done by Peerless as set out in the second contract, at Exhibit #4 Tab 19, totalling $3,675, amounts to different work than that contracted to by Sierra and the damages should be reduced in that amount.

[ 138 ] In the result I dismiss the construction lien claim of Sierra Excavating and find in favour of the Olzsewskis’ counterclaim as follows:

Peerless Costs $35,700 plus food loss of $200(I accept the evidence of the Olszewskis that this could not be quantified with precision) plus Bell repairs $122.43 less the Sierra invoice credit of $14,576.23 total damages amounting to $21,466.20.

[ 139 ] I find Sierra Excavating is liable in the amount of $21,466.20 to Peter and Cora Olszewski. There will be a judgment in that amount.

[ 140 ] The parties may exchange and file cost submissions, if necessary, no later than May 14, 2012.

MILLER, J.

Released: April 12, 2012

Sierra Excavating v. Olszewski and TD Bank, 2012 ONSC 2618

COURT FILE NO.: CV-08-0248-00

DATE: 20120412

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: SIERRA EXCAVATING ENTERPRISES INC. Plaintiff – and – PETER LEON OLSZEWSKI, MARIA CORNELIA OLSZEWSKI and THE TORONTO DOMINION BANK Defendants REASONS FOR JUDGMENT MILLER, J.

Released: April 12, 2012