ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-09-383523
DATE: June 26, 2013
BETWEEN:
HOMEWOOD DEVELOPMENT INC.
A. Seretis and A. Dick, for plaintiff
Fax: 905-294-5688
Plaintiff (defendant by counterclaim)
- and -
2010999 ONTARIO INC. and MERIDIAN CREDIT UNION LIMITED[^1]
P.J.Zibarras and D. Meirovici, for defendant
Fax: 416-306-2967
Defendant (plaintiff by counterclaim)
HEARD: November 20, 21, 22, 23, 27, 28, 29 and 30, 2012 and December 4,5,6 and 7, 2012
Master C. Albert
[1] 2010999 Ontario Inc. (“201”) contracted with Homewood Development Inc. (“Homewood”) to renovate an existing building at 627 Danforth Avenue, Toronto. Conflicts about scope of work, price and payment arose partway through the project. Homewood left the job and claims payment for the materials and services it supplied to 201. 201 counterclaims for completion costs, deficiencies and lost rent.
[2] The issues are:
a) What was the agreed upon scope of work, price and timing? Did the parties agree to use coreslab? Did the parties agree to any extras?
b) How did the contract end? Did Homewood repudiate the contract when it refused to continue or did 201 breach the contract when it refused to pay?
c) What amount, if any, is owing to Homewood for services and materials?
d) What amount, if any, is 201 entitled to recover for delay, including lost rental income?
e) What amount, if any, is 201 entitled to recover for deficiencies?
f) What amount, if any, is 201 entitled to recover for completion costs?
I. Background
[3] Homewood is a family owned construction business run by Constantin (Gus) Saltouridis and his two sons, Steven and Nicholas. Gus Saltouridis is the patriarch. He negotiates the contracts, supervises the workers and deals with contractual and financial matters. Nicholas and Steven work closely with their father. They supervise the workers when Gus Saltouridis is not on site. They also provide labour.
[4] 201, owned by Constantin Voidonicolas, purchased 627 Danforth Avenue on May 17, 2002. The National Bank is the ground floor tenant. Through a different company Mr. Voidonicolas has owned the adjoining building at 635 Danforth Avenue for 20 years. The second floor of 635 Danforth Avenue is leased to Extreme Fitness. Mr. Voidonicolas’ intention regarding 627 Danforth Avenue was to carry out a major renovation and addition with minimal disruption to the bank, which was to continue its day to day operations on the ground floor throughout the project. The plans include demolishing the second floor residential apartments, building an addition at the back and adding commercial space above the expanded ground floor. 201 planned to rent the upstairs space to Extreme Fitness to extend its facility from 635 Danforth Avenue into 637 Danforth Avenue.
[5] Homewood and 201 contracted for Homewood to carry out the construction for a fixed price with installment payments based on performance milestones. The scope of work changed, the design changed, the structural components changed, the front elevation and design changed and the order of work consequently changed. The parties disagreed over timing of payments and when 201 refused to pay for milestone #4, Homewood refused to continue to supply services and materials and, on May 11, 2009, registered a construction lien for $260,000.00 as instrument AT2067701. On May 12, 2009 201 sent a lawyer’s letter to Homewood terminating its services.
II. Contractual terms relevant to the issues
Contract documents
[6] In August 2007 201 prepared plans for a three storey building and applied for a building permit.
[7] In June 2008 Gus Saltouridis and Constantin Voidonicolas met and discussed the proposed project. At that time two sets of plans existed: (i) August 18, 2007 plans for a three storey building with a height of 39 feet, and (ii) July 7, 2008 plans for a three storey building plus mezzanine level with a height of 53 feet, 11 inches.
[8] On July 18, 2008 Homewood and 201 executed a written fixed price contract for $772,500.00 plus GST[^2] for a total contract price of $811,125.00. Under “job description” the contract reads “All work to be completed in accordance to the architectural plans and structural drawings provided by customer to contractor”.
[9] The scope, structure and design of the building was a moving target. Over the life of the project eight different versions of plans were prepared. With each set of plans one or more aspects of the project changed. The contract does not identify any plans by date or otherwise. A considerable amount of trial time was devoted to reviewing the multiple designs. An eighth set of plans was created in May 2009. The following chart summarizes the key features of the multiple sets of plans by date, exhibit number and distinguishing features. Design changes are underlined where they first appear.
Exhibit #
Date of Plans
Distinguishing features (changed feature underlined first time)
8
Aug.18’07 (201 copy)
3 storey; no mezzanine, 39 foot height, north front face of masonry with block frame and windows; no elevator; 2nd floor steel structure
10
Aug.18’07 (engineer’s copy)
3 storey; no mezzanine, 39 foot height, north front face of masonry with block frame and windows; no elevator; ground floor corridor changed; “S” pages missing
3
July 7’08
3 storey plus a mezzanine level above the ground floor, split into two mezzanines not joined; 53 foot 11 inch height; north front face with steel frame and 2 rows of windows; elevator (not joined to mezzanine level and not elevating to roof level)
4
Aug. 12’08
2 storey plus a mezzanine level above the ground floor, split into two mezzanines not joined; 39 foot height; north front face with steel frame and glass; elevator not joined to mezzanine level and elevating to roof level
5
Dec. 8’08
2 storey plus a mezzanine level above the ground floor, with what was previously two split mezzanines now joined; 39 foot 8 inch height; north front face with steel frame and glass; elevator now accessing mezzanine level and elevating to roof level
6
Jan. 15’09
2 storey plus a mezzanine level above the ground floor, with what was previously two split mezzanines now joined; added beam #20 at mezzanine; 39 foot 8 inch height; north front face with steel frame and glass; elevator accessing mezzanine level and elevating to roof level
7
Feb. 10’09
2 storey plus a mezzanine level above the ground floor, with what was previously two split mezzanines now joined; added beam #20 at mezzanine; 40 foot 4 inch height; north front face with steel frame and glass; elevator accessing mezzanine level and elevating to roof level
17
May 20’09
“as built” plans prepared by 201 for litigation; 2 storey plus a mezzanine level above the ground floor with mezzanine once again split into two mezzanines not joined; 39 foot height; north front face with steel frame and glass; elevator accessing mezzanine level and elevating to roof level
[10] The only plans that correspond to the structure that was built are plans dated May 20, 2009 prepared by 201 after Homewood left the job site. These plans were not produced to Homewood before trial and not listed in Schedule “B” of 201’s affidavit of documents as a document over which privilege was claimed. 201 simply treated the May 20, 2009 plans as if they did not exist until close to the end of trial. Pursuant to rule 30.08 201 is not entitled to rely on the May 20, 2009 plans without leave. I refused leave for reasons given orally at trial[^3].
[11] As in most trials the court heard conflicting evidence, which the must be weighed and evaluated for the court to make findings of fact. I raise this issue at this point to address concerns over the reliability of the evidence of 201’s main witness, Constantin Voidonicolas. He tended to exaggerate and either forget important facts or evade the truth. Examples are:
a) He testified that demolition did not begin until after the Saltouridis family returned from Greece in late August. Five other witnesses[^4] testified that demolition was well underway in July and August 2008.
b) He testified that he lost Extreme Fitness as a tenant in February 2009 but Taso Pappas, President and CEO of Extreme Fitness, testified that Extreme Fitness did not decide to forego the space until July 2009 on the basis that its funds would be better invested elsewhere.
c) When asked why his first few payments to Homewood were less than contracted for and invoiced he replied that he withheld GST. Simple arithmetic shows that he withheld more than the GST component of the invoice.
d) At trial he denied that any plans had been prepared after the February 10, 2009 plans, even though he authorized “as built” plans to be prepared in May 2009.
[12] Having found Mr. Voidonicolas’ evidence unreliable, where his evidence conflicts with that of other witnesses I generally prefer the evidence of the other witnesses.
[13] Homewood and 201 agree that the August 12, 2008 plans most closely reflect the project and they both submit that those are the plans referred to in the contract. However, the August 12, 2008 plans did not exist on July 18, 2008 when the parties executed the contract.
[14] The only architectural plans and structural drawings in existence on July 18, 2008 are those sets of plans dated August 18, 2007 and July 7, 2008, which provide for a three storey structure. Neither set of plans design for construction. The August 18, 2007 plans are for a building height of 39 feet. The July 7, 2008 plans are for a building height of 53 feet. No evidence was tendered that a building permit was applied for or issued for a structure 53 feet in height. The executed contract calls for eliminating the third storey shown on the plans.
[15] The August 18, 2007 plans, as modified by the contract, provide for:
a) Steel beam (W460) and poured concrete construction
b) masonry north face with cement block frame and windows
c) building height of 39 feet
d) 2 storey structure with 2 mezzanines (not connected) above the second floor
e) a front stair width of 3 feet 6 inches
f) no plans show an elevator, but the contract adds an elevator shaft of unspecified size.
[16] The executed contract also includes a section describing work included in the contract price that is not shown on the plans, including:
2 Mezzanines completed with TJ floor joists and 5/8 plywood
Stairs from 2nd floor to roof
2 steps from 2nd floor to Mezzanine
[17] I find that the plans incorporated by reference into the written contract executed by the parties are the August 18, 2007 plans. These plans existed at the time the contract was executed and most closely resemble the scope of work described in the contract.
... (continues exactly as in the original text through paragraph [187], maintaining verbatim wording)
Master C. Albert .
Released: June 26, 2013
COURT FILE NO.: CV-09-383523
DATE: June 26, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HOMEWOOD DEVELOPMENT INC.
plaintiff (defendant by counterclaim)
- and -
2010999 ONTARIO INC. and MERIDIAN CREDIT UNION LIMITED
defendant (plaintiff by counterclaim)
REASONS FOR JUDGMENT
Master C. Albert
Released: June 26, 2013
[^1]: Action dismissed as against Meridian
[^2]: GST was 5% at the time
[^3]: The May 20, 2009 plans were produced for the first time during the examination in chief of 201’s expert, Ron Koerth, and identified as the plans upon which Mr. Koerth based his expert report. 201 argued that the plans had not been produced because they enjoyed litigation privilege, having been prepared in contemplation of litigation. I rejected that submission because the plans were not listed in Schedule “B” of 201’s affidavit of documents. Nor had 201 complied with rule 30.09, whereby a party waiving privilege is required to roduce te document at least 90 days before trial. I ruled that the May 20, 2009 plans were admissible solely for the purpose of Mr. Koerth identifying that these were the plans he relied on in forming his opinions. I ruled that the May 20, 2009 plans may not be relied upon at trial for any other purpose.
[^4]: Constantin Saltouridis, Nicolas Saltouridis, Steven Saltouridis, Stan Pon and George Papapetrou