ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-415070
DATE: February 7, 2013
BETWEEN:
1269016 ONTARIO LIMITED
B. Nicholson, for the plaintiff
Fax: 647-343-7077
Plaintiff (defendant by counterclaim)
- and -
DAVID ELLIS, ASNETH JAMES, HOME TRUST COMPANY[^1] and FERNANDO LEAL
D. Elllis, 166 Caledonia Road, Toronto, ON M6E 4S7, in person
A. James, 166 Caledonia Road, Toronto, ON M6E 4S7, in person
Defendants (plaintiffs by counterclaim)
HEARD: January 29, 30 and 31, 2013
Master C. Albert
[1] David Ellis and Asneth James (“Owners”), owners of a property at 1178 Weston Road, hired a contractor to supply excavation and other services. The claim of $27,880.00 is for unpaid services and materials. The Owners counterclaim for $40,983.84[^2] alleging that the work was deficient and incomplete.
[2] The issues are:
a) Did the Owners contract with 1269016 Ontario Limited (“126”) or its principal Alexandre Laranjeira (“Alex”) (referred to in these reasons as the “Contractor”)?
b) What are the contract terms regarding price, scope of work and timing?
c) Did the Contractor complete the work?
d) Is the Contractor liable to the Owners for any deficiencies and completion costs and if so, in what amount?
I. Preliminary issue
[3] Counsel for the Contractor raised as a concern the Owners’ failure to comply with the court’s orders to provide disclosure before trial. A history of the reference is relevant for context.
[4] The Contractor registered a construction lien on October 22, 2010 as instrument AT2534140 and issued this action on November 25, 2010. On July 8, 2011 Justice Stinson referred the action to be tried by a construction lien master. By order dated August 29, 2011 I fixed the trial date as October 11, 2011. As is the practice in Toronto I convened several pretrial hearings for directions (referred to in these reasons as “pretrials”) to fix a litigation timetable, compel disclosure by the parties of the documents and evidence they intend to rely on at trial, identify trial issues and give directions regarding the conduct of the trial.
[5] The first pretrial was convened on October 11, 2011. Notwithstanding that the Contractor had served notice of the hearing on the Owners, neither of them appeared. I adjourned the pretrial to October 31, 2011. Ms James attended but Mr. Ellis did not, instead sending a letter with Ms .James explaining that he was out of town. Satisfied that Mr. Ellis had been served and Ms James would communicate to him what transpired at the pretrial I ordered a litigation timetable.
[6] I convened the next pretrial on April 30, 2012. The Owners had not complied with my procedural orders to deliver affidavits of documents and particulars of the Owners’ counterclaim. I issued an order allowing them another chance to do so and directed the parties to file their list of proposed trial witnesses with an explanation of the relationship of each witness to the issues.
[7] At the next pretrial conducted on July 16, 2012 I reviewed the lists of proposed witnesses provided by the parties and issued an order listing the trial witnesses: two by the Contractor and ten by the Owners. I also fixed the trial date and trial procedure, taking into account the requirements of section 67 of the Construction Lien Act and rule 55.01 to establish a procedure that is summary in nature and proportionate to the modest quantum in issue. I ordered that the trial be a modified summary trial and adopted a modified rule 76 procedure.
[8] At trial the Owners called only three of their ten proposed witnesses and, with leave, called three additional witnesses who had not been disclosed to the Contractor before trial. The Owners had not summonsed any other witnesses and at trial, after calling their last witness, they advised the court that they abandoned calling any other witnesses.
[9] The court recognizes that self-representation presents a challenge to the parties. The Owners are challenged because they are not trained as lawyers and it is difficult for them to understand the procedures that must be followed in advance of trial and during trial. It is also a challenge for them to comprehend the intricacies of presenting evidence to the court and to distinguish admissible from inadmissible evidence, fact from opinion evidence, and argument from evidence.
[10] I recognize that the Owners put considerable effort into preparing and presenting their case. The rules of evidence and the procedures established by the rules of civil procedure exist for good reason: to ensure fairness to all litigants before the court. It would be unfair to the Contractor for the court to relieve the Owners of important evidentiary and procedural standards required of litigants in the Superior Court of Ontario merely because they represent themselves.
[11] Having said that, and recognizing that self representation is not always a litigant’s first choice and may be an access to justice issue, the court granted the Owners many indulgences in the pretrial process and throughout the trial. For example, had the Owners been represented by counsel they would have been required to deliver a Scott Schedule particularizing their deficiency claim. Instead, before trial, they submitted only a list of invoices without any explanation of how the invoices relate to the issues pleaded.
[12] The Owners were also allowed an indulgence when I granted leave permittimg them to call viva voce evidence of witnesses without having delivered affidavits of evidence in chief or statements of anticipated evidence, contrary to my pretrial orders. The reason I did not enforce the orders is my concern that requiring these self-represented parties to prepare affidavits of evidence in chief may have been a barrier to access to justice. I had made the order initially because it appeared from the pretrial events that the owners were receiving assistance from a lawyer in the background, having met with lawyer Sidney Klotz on more than one occasion.
[13] Recognizing that requiring self-represented litigants to prepare affidavits and have them sworn might have presented too onerous a challenge, I allowed them to present evidence in chief viva voce through witnesses at trial and imposed the same time limits as set out in my pretrial orders regarding time limits for witnesses under summons. I recognize that granting leave put the Contractor at a disadvantage at trial, not having any notice of the anticipated evidence of the Owners’ trial witnesses. I directed that the Contractor would be given greater latitude on rebuttal evidence due to the lack of pretrial disclosure by the Owners.
[14] Had the Owners been represented by counsel the court would have enforced its pretrial orders requiring a modified summary trial, with affidavit evidence in chief or outlines of anticipated evidence of witnesses under summons delivered by December 31, 2012.
[15] The Owners’ self-representation was challenging to the Contractor. Aside from conducting a trial without any clear understanding of the opponent’s defence and counterclaim, the pretrial and trial process were longer and more complicated than they would have been had the Owners been represented. Re-attendances were required because of the Owners’ failure to comply with the court’s directions. Also, the Owners’ list of proposed witnesses was a moving target throughout the trial.
[16] Faced with the alternative of having the trial adjourned, the Contractor’s counsel asked the court to note his objection and reluctantly agreed to proceed.
II. Credibility
[17] The parties, through their witnesses, tendered facts that were contradictory. In making factual findings the court must assess the credibility of the witnesses.
[18] Emanuel Laranjeira testified in chief by affidavit and was cross-examined orally at trial. His evidence in chief contains inconsistencies. At paragraph 2 he recites that the Contractor and the Owners entered into the contract attached as exhibit “A” to his affidavit. However, the document is not signed by the Owners. He provided no evidence in chief of any surrounding circumstances that would elevate an unexecuted document to an agreement but he did so in cross-examination. He clarified that the Contractor signed two copies of the contract and that he, Emanuel Laranjeira, personally gave one copy to the Owners on July 4, 2010. He further testified that the parties agreed to the price shown in the contract and that the Owners did not sign it because they wanted to review the contract before they signed it. His credibility would have been greater had he included this evidence of surrounding circumstances in his affidavit evidence in chief.
[19] At paragraph 9 Emanuel Laranjeira recites that the “Fourth payment was provided in full” which contradicts the undisputed fact that the Owners paid a total of $25,000.00. I suspect there is a missing “not” in the affidavit, which would be consistent with the context of the next sentence, and that the Fourth payment was in the amount of only $5,000.00.
[20] The affidavit continues at paragraph 9 to express the deponent’s concern about the Owners’ ability to pay and deposes “at this point all of the work detailed in the Contract was completed”. The paragraph is evasive. Emanuel Laranjeira never deposes that the work required to trigger the Fifth and Sixth payments was done. His concern over payment began when the Fourth payment was short.
[21] At paragraph 16 Emanuel deposes that as the work neared completion (in other words, it was not yet complete) he began to worry about getting paid. He then states that the work was completed by mid-August 2010, which contradicts the construction lien registered on October 22, 2010 which states that the Contractor supplied services and materials up to September 10, 2010.
[22] I found Emanuel Laranjeira to be a somewhat careless witness who was less than fully forthcoming but ultimately truthful.
[23] Alexandre Laranjeira, who is Emanuel Laranjeira’s father and was principal of 126 at the time of the work, testified in chief by affidavit and was cross-examined orally at trial. His affidavit is a duplication of Emanuel’s affidavit. In fact, at paragraph 9 he deposes that “Alex and myself began to become worried” when he probably intended to depose that “Emanuel and myself began to become worried”. I attribute this to careless drafting by his lawyer, and in reading over the affidavit before signing it neither the lawyer nor the client caught the error.
[24] Alexandre Laranjeira presents as a straightforward, honest, simple, hardworking man. He was quick to admit when he was wrong, acknowledging that he caused damage to the gas line and took responsibility for its repair. His answers were straightforward and forthcoming without hesitation. I found him to be a truthful and credible witness.
[25] The Owners called Manuel Costa, who testified in chief and was cross-examined at trial. The Owners did not deliver a statement of anticipated evidence for this witness or an affidavit of evidence in chief before trial, contrary to the court’s order. The Owners contracted with Manuel Costa in October 2010 to perform concrete repairs to the sidewalk in front of the property and to build a concrete walkway and parking pad at the side and back of the property. Mr. Costa was a credible witness.
[26] The Owners called Mario Fallico, who testified in chief and was cross-examined at trial. The Owners did not deliver a statement of anticipated evidence for this witness or an affidavit of evidence in chief before trial, contrary to the court’s order.
[27] Mario Fallico provided concrete cutting work for in July 2010, cutting pockets in concrete blocks. He presented as an overly confident witness who tried to oversell his evidence. He was less than credible for several reasons. First, he testified that the Contractor had not installed any rebar or concrete in the blocks and when shown a photograph of a block (exhibit 1, tab J) he insisted that it was not a block from the subject site. A more credible answer would have been that he had not seen every block on site and he could not tell whether the photograph depicted a block from this site or another site.The Owners do not deny that the Contractor inserted rebar and concrete into the blocks, they merely claim that the Contractor spaced the insertions too far apart. Second, Mr. Fallico testified that he was paid in cash in May 2010, which predates the date he gave as the date he performed the work, and he changed his answer when the date of July 2010 was suggested to him by Mr. Ellis as questioner. Third, the receipt produced and filed as an exhibit is undated and does not indicate when services were supplied. I find Mr. Fallico a less than credible witness. Where his evidence conflicts with the evidence of a more credible witness I accept the evidence of the other witness.
[28] The Owners called Fernando Leal, who testified in chief and was cross-examined at trial. The Owners did not deliver a statement of anticipated evidence for this witness or an affidavit of evidence in chief before trial, contrary to the court’s order.
[29] Fernando Leal is the vendor of the property to the Owners and holds a vendor takeback mortgage of $70,000.00. He testified that the Owners have been in arrears for more than a year and he has taken no steps to enforce the mortgage or collect the arrears. He also testified that he owns an equipment rental company called Leal Rental Centre Inc. He testified about invoices that total $10,626.92 for machinery he rented to the Owners in 2010 for which he has not been paid. Regarding both debts he explained that the reason for not trying to collect from the Owners is that they seemed to be experiencing financial problems. I find the explanation less than credible. One would expect a creditor in Mr. Leal’s position to take steps to secure payment of these debts.
[30] The Owners called Carlos Barreira, who testified in chief and was cross-examined at trial. The Owners did not deliver a statement of anticipated evidence for this witness or an affidavit of evidence in chief before trial, contrary to the court’s order.
[31] Mr. Barreira lives at 1180 Weston Road, next door to the subject property. He is a construction worker but did not work on this project because he was busy with other construction jobs at the time. His evidence was not forthcoming. He testified that he never saw Emanuel Laranjeira working at the site, withholding until he was cross-examined that as a busy construction worker he was away from home from early in the morning until 6:00pm. Had he been forthcoming he would have provided that explanation when responding to Mr. Ellis’ question as to whether he had ever seen Emanuel Laranjeira working on site. Instead his initial answer was designed to give the impression that he watched the site to see who was working and Emanuel Laranjeira was not there.
[32] Mr. Ellis also tried to elicit opinion evidence from this witness as to whether the Contractor had performed the work properly and how much the job should have cost. Mr. Barreira was not called as an expert witness and the requirements of rule 53.05 regarding expert witnesses had not been met. His opinions are inadmissible.
[33] Mr. Barreira was asked on cross-examination about his evidence in chief that the foundation wall was below grade. He was shown the photograph at exhibit 1, tab I, which clearly shows the foundation wall above grade, and in the face of the photograph he would not admit that the foundation wall in the photograph was above grade. Rather, he diverted the question and stated that he added a row of block. His answer discredits the probative value of his evidence.
[34] Mr. Barreira was also evasive when asked questions about talking to a person he referred to in his evidence in chief as a “friend” working on site. When asked in cross-examination to identify the friend by name he did not know the person’s name. He qualified his earlier answer by stating that the person was only an acquaintance. I find that Mr. Barreira tried to oversell his evidence, reducing his credibility. Where his evidence conflicts with that of a more credible witness I accept the evidence of the other witness.
[35] The Owners, Asneth James and David Ellis, both testified in chief and were cross-examined at trial. Neither of the Owners delivered statements of anticipated evidence or affidavits of evidence in chief before trial, contrary to the court’s order.
[36] I found the evidence of both Mr. Ellis and Ms Smith largely self-serving and lacking in credibility. There are many examples throughout this reference that lead me to this conclusion.
[37] Ms James testified that the Laranjeira’s never gave her or Mr. Ellis a copy of the contract. There has been a pattern in this construction lien reference of the Owners (a) denying receipt of documents and (b) asserting that they delivered documents that were never delivered.
[38] Ms James testified that she and Mr. Ellis waited for three hours for the Laranjeira’s to bring over the written contract and they never did. Ms James testified that someone named “Serge” was waiting with them but the Owners did not call Serge as a witness to corroborate this evidence. Then, after hearing rebuttal evidence in which Emanuel Laranjeira repeated his earlier testimony that he had delivered the written contract personally, the Owners asked for leave to recall Mr. Barreira to testify that he had been with Ms James and Mr. Ellis when they were waiting on their porch for the Laranjeira’s to deliver the written contract. I refused leave to recall Mr. Barreira because to allow it would have been prejudicial to the Contractor. The Owners had not asked the witness the question when testifying earlier even though they knew that delivery of the written contract was relevant.
[39] The fact that the Owners made the request is curious. It is the first time they even suggested that Mr. Barreira had been with them when they were waiting for the Laranjeira’s to deliver the written contract. They both knew that whether or not the Laranjeira’s had delivered the written contract was a relevant issue, yet they did not ask Mr. Barreira about it when questioning him as their witness. It is curious because Mr. Barreira was available to them as a witness and Serge was not. This conduct calls into question their credibility.
[40] Ms James testified when examined in chief by her spouse Mr. Ellis that she was never on the job site when the work was being carried out. Subsequently, still in examination in chief, she testified that she got down into the “hole” (referring to the excavation) and that she was at the site three times a week from 4:00 or 5:00 in the afternoon, staying for a few hours at a time. Then in cross-examination she testified that she was not on site on a regular basis.
[41] Mr. Ellis testified that he initially approached Alexandre Laranjeira at Mr. Laranjeira’s home, described the project and asked for a quote. He further testified that Alexandre Laranjeira quoted without visiting the site. He later testified that Alexandre Laranjeira provided the quote after visiting the site. Mr. Laranjeira’s evidence is that he priced the job after visiting the site.
[42] Mr. Ellis testified that the Contractor used machinery left on site by the prior contractor. The Laranjeira’s both testified that they used their own equipment and then rented a piece of equipment when one of their machines broke down, but they never used equipment left on site by someone else.
[43] Mr. Ellis testified that he had plans, specifications and building permits for the project but he had not supplied them to the Contractor, nor did he produce any in evidence before or during the trial. In cross-examination he admitted that plans came later.
[44] Mr. Ellis, himself a construction worker, described the construction work he performs as “painting, sanding, floor finishing and drywall”. He stated in evidence that he did not act as general contractor on the job at his property at 1178 Weston Road because to do so would be a conflict of interest. As a construction worker himself Mr. Ellis would be familiar with the term “general contractor”. According to the evidence of Emanuel Laranjeira, Alexandre Laranjeira and Carlos Barreira, Mr. Ellis was on site and co-ordinated the work. He arranged for the contractors and attended the site. That is the role of a general contractor. Mr. Ellis’ statement that he did not act as general contractor on the project is not credible.
[45] Mr. Ellis gave evidence that he never saw Emanuel Laranjeira working on site but when shown a photograph (exhibit 3, tab G) he admitted that it shows Emanuel Laranjeira working on site and Mr. Ellis in the excavated area with him. When shown another photograph of Emanuel Laranjeira on site with a hammer in his hand Mr. Ellis insisted that Mr. Laranjeira was not working but merely holding a hammer. His denial of the obvious discredits him.
[46] Mr. Ellis testified that he paid a contractor, Manuel Costa, to repair the city sidewalk allegedly damaged by the Contractor because a city inspector told him that he must do so or the city would bring in workers and charge Mr. Ellis thousands of dollars. Mr. Ellis did not corroborate this evidence with any written documentation (a letter or work order from the city or a permit for carrying out construction work on city property). Nor did he call the city inspector as a witness. Municipal regulations require permits and municipal approval of any work carried out on city property. Mr. Ellis’ evidence, in the absence of corroboration, is not credible
[47] Mr. Ellis pleaded that the scope of work required the Contractor to excavate to specific dimensions. At trial he was asked about these specifications and gave different specifications. Mr. Ellis explained the discrepancy as an error in the pleadings. This calls into question the credibility of his evidence about the scope of work, the job specifications and the terms of the contract. It also calls into question whether his instructions to the Contractor as to scope of work, if given verbally, were similarly ambiguous.
[48] When asked about the status of his mortgage he testified that it is up to date, in direct conflict to Mr. Leal’s evidence that it is in arrears by one year’s payments.
[49] Throughout this reference proceeding the Owners have repeatedly asserted that they did not receive documents from the Contractor’s counsel and from the court, and that they delivered documents to the Contractor and to the court that the Contractor claims never to have received and that are not in the court file.
[50] At the pretrial hearing for directions on April 30, 2012 the Owners claimed that they had not received documents sent to them by mail by the court. They also claimed that they had not received documents that the Contractor’s lawyer claims to have served on them. Concerned that they were not receiving their mail the court directed a process whereby the Owners were to attend in person and pick up documents.
[51] At the pretrial hearing for directions on July 16,2012 the Owners claimed that the Contractor’s lawyer had not made the documents available for pick up. Mr. Nicholson advised the court that he did so but the Owners failed to attend. The Owners claimed that they still did not have a copy of the Contractor’s affidavit of documents. I again gave specific directions for the Owners to attend on a specified date to pick up the documents from the Contractor’s lawyer. Again the Owners claimed that the documents were not made available to them, writing to the court that they did not have a phone number for the Contractor’s counsel. That assertion was false because the court had given a copy of the July 16, 2012 endorsement to the Owners in court that day and Mr. Nicholson’s telephone number is on the front page of the endorsement.
[52] The Owners’ assertions throughout the reference that documents delivered to them or made available to them for pick up were not delivered or made available discredits them.
[53] An event at the opening of trial adds to my concern that the Owners have not been truthful with the court or with the Contractor in these proceedings. On the first day of trial the court asked the Owners for their affidavits of evidence in chief of witnesses, and their statements outlining the anticipated evidence of witnesses under summons, none having been served on the Contractor or filed with the court[^3]. At first Mr. Ellis stated to the court, and Ms James nodded her head in agreement, that the Owners had served and filed seventeen (17) affidavits. When I asked for proof of service and filing Mr. Ellis stated that the affidavits had been served by an agent who he described as not being a paralegal but as someone who works for a lawyer. When I asked him to identify the lawyer that the agent worked for he said he did not know the name of the lawyer. Then when pressed he said the lawyer was Syd Klotz. Mr. Klotz has been in the background at various times, including commissioning the Owners’ Affidavit of Documents. According to the directory of the Law Society of Upper Canada Mr. Klotz is a lawyer practicing at 1177 Weston Road, just one municipal address number away from the property that is the subject of these lien proceedings. That Mr. Ellis would state baldly to the court that he did not know who the agent who allegedly delivered the materials works for is completely devoid of credibility.
[54] I pressed Mr. Ellis further about his statement to the court that he had served and filed seventeen affidavits. He told the court that the agent’s name is “Shak Barrone”[^4], and that the agent did not serve and file the Owners’ affidavits of evidence in his capacity as employee of Mr. Klotz but rather he did so outside of his work. Mr. Ellis told the court that the agent had not prepared an affidavit of service and could not be reached because he was in the hospital with his mother who was having an operation. On the second and third days of trial Mr. Ellis did not produce an affidavit of service from the agent or any documentation to corroborate his story. I suspect that the agent referred to at trial by Mr. Ellis as “Shak Barrone” is Shakeel Balroop who deposed an affidavit of service of the affidavit of documents on Mr. Leal on June 13, 2012 (see the footnote below). Ms James, co-owner, co-defendant and spouse of Mr. Ellis, was present in court throughout this explanation by Mr. Ellis and made no effort to clarify or correct the statements made by Mr. Ellis to the court.
[55] Mr. Ellis’ outright fabrications, acquiesced to by Ms James, that the Owners had prepared, served and filed seventeen affidavits of evidence in chief discredits them.
[56] For all of these reasons when the evidence of Ms Ellis and Ms James conflicts with the evidence of other witnessed I prefer the evidence of the other witnesses.
III. The Contract
[57] The court heard conflicting evidence about the terms of the contract from the Owners on the one hand and from the Contractor’s witnesses on the other hand. The conflicting evidence goes to the identity of the contracting parties, the contract price and the scope of work.
[58] The Contractor’s position is that the contracting parties are 126 as the Contractor and David Ellis and Asneth James as the Owners, that the contract price is $52,880.00 plus tax, and that the scope of work is as specified in the written agreement dated July 5, 2010 but signed only by the Contractor, filed as exhibit 1, tab A (the “Unexecuted Agreement”).
[59] The Owners’ position is that the contract is between Alexandre Laranjeiro personally as the contractor and Mr. Ellis and Ms James as the Owners, for the price of $36,000.00 including tax. They claim that the scope of work included excavating the site for the addition, disposing of debris and excavated materials, forming, pouring concrete footings, laying the foundation with rebar in the blocks, installing weeping tile, backfilling and building the above ground exterior walls to a height of ten feet. They provided no documentation to corroborate any portion of their version of the contract.
(i) Formation of the contract
[60] Emanuel Laranjeiro and his father Alexandre Laranjeiro both gave evidence as to the formation of the contract. I prefer the evidence of Alexandre Laranjeira and Emanuel Laranjeiro over the evidence of both Ms James and Mr. Ellis as more credible for reasons already given. I find that Alexandre Laranjeira met with Mr. Ellis one week prior to July 5, 2010, which was the first day of work. After Alexandre Laranjeira visited the site they discussed scope of work and price and agreed on terms. Alexandre Laranjeira told Mr. Ellis that his son, Emanuel Laranjeira, would prepare the written contract and deliver it to Mr. Ellis.
[61] I accept the evidence of Emanuel Laranjeira that on July 4, 2012 he delivered the written contract to Mr. Ellis in the form filed as exhibit 1,tab A, signed by Alexandre Laranjeira. I further find that Mr. Ellis did not sign it right away because he wanted time to read it carefully.
[62] There is no fully executed written contract. I find that the agreement between the parties is an oral agreement. The Unexecuted Agreement that Alexandre Laranjeira signed and presented to Mr. Ellis is evidence that corroborates the terms of the verbal agreement of the parties.
[63] The Contractors commenced work the next day. By then Mr. Ellis had sufficient time to read and sign the contract. There is no evidence that he prevented the Contractor from commencing or continuing the work or that he disputed the contract price or discussed it any further with the Contractor.
[64] Mr. Ellis and Ms James both testified about the terms of the contract. Their version of events is that Mr. Ellis was driving along a street when he saw an excavation in progress. He stopped and walked over to the contractor who he discovered to be Alexandre laranjeira, who had been the contractor on his house renovation in 2002. Mr. Ellis told Mr. Laranjeira that he needed someone to take over the project at 1178 Weston Road from the person who had started the excavation.
[65] Mr. Ellis claims that he discussed the job with Alexandre Laranjeira who, without visiting the site, agreed to take it over for the price of $25,000.00 for the excavation, foundation and backfill plus an additional $8,0000.00 for architectural block above grade, for a total of $33,000.00 including taxes. Mr. Ellis claims that he called his wife at work and Mr. Laranjeira spoke with her about the contract price and they agreed to a price of $33,000.00. Ms James echoes that version of events. Mr. Ellis and Ms James claim that they never received a copy of the written contract from the Laranjeira’s and that if they had received it they would not have agreed to the price.
[66] The Owners paid four cash installments that total $25,000.00, predicated upon the completion of construction milestones agreed to verbally and corroborated as to the terms of payment by the Unexecuted Agreement. The parties agree that payments made total $25,000.00.
[67] For reasons already given I accept the evidence of Alexandre Laranjeira and Emanuel Laranjeiro over that of Mr. Ellis and Ms James. I find that the parties entered into a verbal agreement and that the terms of the agreement are reflected in the Unexecuted Agreement prepared contemporaneously, delivered to the Owners on or about July 4, 2010 and filed as exhibit 1, tab A. I further find that having received a copy of the Unexecuted Agreement, having permitted the Contractor to enter the property and perform the contract services, and having paid installment payments based on performance milestones set out in the written contract, the Owners had verbally agreed to the terms that are set out in the Unexecuted Agreement. I find that the terms of the verbal agreement are as set out in the Unexecuted Agreement.
(ii) The contracting parties
[68] The Owners claim that their agreement is with Alexandre Laranjeira and not with 126. They claim that they did not know of the existence of 126.
[69] The Unexecuted Agreement identifies the contractor as Superior Disposal Excavating and Demolition, a division of 1269016 Ontario Ltd. Alexandre Laranjeira was its principal in 2010 and signed the agreement as an authorized signing officer. I find that the Owners knew that the contracting party was the corporation and not its principal and that the agreement reached verbally with Alexandre Laranjeira was in his capacity as agent of 126. The contracting parties are 126 as Contractor and Mr. Ellis and Ms James as Owners.
(iii) The contract price and payment terms
[70] Having found that the terms of the verbal agreement are accurately reflected in the Unexecuted Agreement I find that the contract price is $52,880.00. The only issue is whether it is a tax included price or whether tax is extra. The lien claim registered by 126 claims that the balance owing is $27,880.00 inclusive of HST and the statement of claim was issued for $27,880.00, without adding any amount for HST. That quantum is the amount arrived at after deducting the $25,000.00 paid from a tax-included contract price of $52,880.00. Based on the Contractor’s conduct, I find that the Contractor waived any entitlement to claim tax as an extra. The contract price is $52,880.00 inclusive of taxes.
[71] The parties agreed that payments would be by installments based on milestones. The milestones are reflected in the Unexecuted Agreement[^5]:
$5,000.00 when the machines are delivered
$8,000.00 when excavation completed
$7,000.00 when footings completed
$25,000.00 when block work completed
$2,600.00 when membrane installed
$5,280.00 when job completed
[72] The Owners paid the first three installments and a portion of the fourth installment for a total of $25,000.00 paid.
(iv) The scope of work
[73] The parties agree that they discussed scope of work. Alexandre Laranjeira’s evidence is that their agreement is reflected in the Unexecuted Agreement. Mr. Ellis’ evidence is that the scope of work includes building the above-ground walls of the addition with architectural block. Both Laranjeira’s deny that the scope of work included the above ground exterior walls of the addition.
[74] Listed in the Contractor’s scope of work as reflected in the Unexecuted Agreement are two items: “Install and supply 3 10’ block walls for the new addition on the building” and “Supply and install 8’ block wall on the north side of the building”. I find that these two items are included in the contractual scope of work and refer to the above ground exterior structural walls of the addition that Mr. Ellis refers to as the walls built using “architectural block”. I further find that the Contractor did not compete this portion of the work before leaving the job site.
IV. Accounting
[75] The Owners claim to have paid and the Contractor acknowledges receiving payment of $25,000.00 in cash.
[76] The Contractor takes the position that it completed all of the work required by the contract and claims the full contract price. Based on a contract price of $52,880.00, if I were to find that the evidence proves that the Contractor completed the work then the balance owing under the contract would be $27,880.00. However, from that amount any proven deficiencies and completion costs must be deducted.
V. Deficiencies and completion costs
[77] The Owners claim that they have overpaid by $5,000.00 and ask for an order refunding that amount to them. They provided no evidence to establish on a balance of probabilities that they overpaid by $5,000.00 or by any amount for the services and materials supplied by the Contractor. This portion of their defence and counterclaim is dismissed.
[78] In addition, the Owners plead a number of deficiencies, some of which they pursued at trial. Each of the deficiencies pursued at trial is described below together with my findings.
(i) Did the Contractor complete the work?
[79] The Contractor’s evidence of completion is in the affidavits of both Alexandre Laranjeira and Emanuel Laranjeira at paragraph 12: “All of the work detailed in the contract and as set out in paragraph 6 herein was completed in full to the satisfaction of the terms of the contract”.
[80] However at paragraphs 9 and 16 the deponents attest to their concern at the time of the fourth payment (which was short by $20,000.00) over the Owners’ ability to pay the Contract amounts. They further attest to their concern about payment “as the work progressed and neared completion” suggesting that the work was not complete, and refer to discussions with Mr. Ellis about payment. If their worries about payment occurred when the fourth payment was short paid and as the work neared completion then by implication they had not yet completed the job.
[81] The Owners rely on the evidence of Carlos Barreira, a contractor hired by the Owners to work on site in October 2010. He testified that his work included building the exterior walls of the addition. Mr. Barreira presented an invoice from his company[^6], CAM Masonry Ltd., for $4,000.00 plus HST for a total of $4,520.00 to “build new building with finished block - labour”.
[82] Having found that the exterior walls described in the scope of work as ten feet high for three walls and eight feet high for the fourth wall were part of the Contractor’s scope of work, and accepting the evidence that Mr. Barreira built these walls in a day for the price of $4,520.00, I find that this completion claim has been proven and that the Owners are entitled to deduct the $4,520.00[^7] paid to CAM Masonry Ltd. from the balance otherwise owing to the Contractor.
(ii) Cuts for joists
[83] At trial the Owners asserted as a deficiency that the Contractor failed to make cuts in the block to lay joists. The problem with this claim is that the Owners have not proven that the contract or the building specifications required cuts in the block to lay joists. In fact, the Owners did not file any building plans or job specifications. Mr. Ellis admitted in cross-examination that plans came later.
[84] Emanuel Laranjeira testified that cuts in the joists were not required or included in the scope of work. He further testified that the Owners never complained about any deficiencies in the work as the job progressed. I prefer the evidence of Mr. Laranjeira over that of Mr. Ellis and Ms James for reasons already explained. Even if this was a deficiency the Owners did not give the Contractor an opportunity to correct it.
[85] I find that the Owners have not met the onus of proving a deficiency regarding cuts in the block for joists.
(iii) Site clean up
[86] The Owners lead evidence about dirt on the site from concrete dust and debris and also about concrete residue on the block. I found this evidence irrelevant to the issues raised in the pleadings. Even if relevant, construction is dirty and messy and it is not unreasonable to expect concrete dust and dirt on site prior to the final site cleanup.
[87] Even if this was a deficiency the Owners did not give the Contractor notice of the deficiency or an opportunity to correct it. I find that the Owners have not met the onus of proving that there was a deficiency regarding site clean-up.
(iv) Damage to gas lines
[88] The Owners claim that the Contractor cut the gas line and ask the Contractor to pay for concrete repairs to the sidewalk in front of the property. They rely Manuel Costa’s invoice for quantification. The Owners have not proven that repairing the municipal sidewalk was related to the gas line repair or that a permit was issued by the City of Toronto authorizing the repairs.
[89] The Contractor admits to causing damage to the gas line leading to the roof. Alexandre Laranjeira testified that he arranged and paid for the gas line repair at the Contractor’s expense. The Owners did not lead any evidence of probative value to the contrary. This claim for set-off is dismissed.
(v) Rebar in block
[90] The Owners claim that the Contractor failed to insert sufficient rebar into the concrete foundation block, asserting that it should have been placed every twelve inches. Alexandre Laranjeira testified that rebar was inserted every one and a half or two blocks.
[91] The parties did not file as evidence any building plans or specifications. Under cross-examination Mr. Ellis testified at first that plans came later. Then he contradicted himself and testified that he had structural engineering plans for the foundation but they were too expensive and they were not provided to Mr. Laranjeira.
[92] The contract is silent as to the spacing of rebar. No evidence was lead as to any building standards that require rebar to be inserted any differently than it was in this case. Mr. Laranjeira testified that the Owners made no complaints about the spacing of rebar or any other aspect of the construction while the job was ongoing.
[93] I find that the Owners have not met the onus of proving that the spacing of rebar in the foundation block was deficient. This portion of the set-off claim is dismissed.
(vi) Other complaints by the Owners
[94] The Owners claim the cost of adding layers of block to the foundation to raise it to ground level. There is no evidence of probative value that the Contractor laid the foundation improperly or that it was below grade. Witness Carlos Barreira, who worked on site after the Contractor left, testified that the block as laid was below street level. However, the photographs filed as exhibit 1, tab I show otherwise. Mr. Barreira was not called as an expert witness. There was no expert evidence that the manner in which the Contractor laid the foundation block was deficient. I find that the Owners have not proven that the amount paid to Mr. Barreira of $1050.00[^8] to lay additional foundation block and repair the foundation was due to the Contractor’s failure to carry out the contract work properly or at all.
[95] The Owners claim as a deficiency the cost of building a concrete parking pad and a concrete walkway on the property. Neither of these items was within the scope of the Contractor’s work and these deficiency claims are dismissed.
[96] The Owners filed invoices from Leal Rental Centre Inc. for machinery and equipment rented between June 2010 (prior to the contract) and January 2011 (four months after the Contractor left the site). The invoices add up to $10,626.92. Fernando Leal, principal of Leal Rental Centre inc. and vendor of the property to the Owners, testified that the Owners have not paid the invoices and he has not taken any collection proceedings. Mr. Ellis explained that he has an understanding with Mr. Leal that he will pay “in due time”. The Owners have not provided evidence that link these invoices to any responsibility for payment by the Contractor either under the contract or in respect of a proven deficiency. I find that this expense has not been proven as a deficiency and that even if it had been proven it is not for items for which the Contractor is responsible. The claim for payment by the Contractor of the unpaid Leal invoices is refused.
VI. CONCLUSION
[97] From the balance owing on the contract of $27,880.00 the completion cost of $4,520.00 for the above ground walls must be deducted, leaving a balance owing of $23,360.00.
[98] THIS COURT FINDS AND ORDERS THAT the Owners, David Ellis and Asneth James pay to the Contractor, 1269016 Ontario Limited, the sum of $23,360.00 plus prejudgment interest calculated in accordance with the Courts of Justice Act and post judgment interest from the date the reference report is signed.
[99] Costs: It generally follows that a successful party recovers costs. If the parties cannot agree on costs they may file written submissions of up to five pages (plus any applicable case law and the Bill of Costs). If so the submissions on costs must be served on the opposite party and filed with the court[^9] by the following deadlines:
a) Plaintiff: by February 22, 2013
b) Defendant: by March 8, 2013
c) Plaintiff’s reply: by March 20, 2013
[100] Interest calculation, report and title abstract: In a construction lien reference the referee’s disposition must be expressed in a report (see: Construction Lien Act, section 62). By the same deadlines indicated above the Contractor must and the Owners may file their submissions on the calculation of prejudgment interest, including a per diem rate. The Contractor must also file an up to date title abstract showing deleted instruments.
Master C. Albert .
Released: February 7, 2013
2013 ONSC 846
COURT FILE NO.: CV-10-415070
DATE: February 7, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1269016 ONTARIO LIMITED
Plaintiff (defendant by counterclaim)
- and -
DAVID ELLIS, ASNETH JAMES, HOME TRUST COMPANY and FERNANDO LEAL
Defendants (plaintiffs by counterclaim)
REASONS FOR JUDGMENT
Master C. Albert
Released: February 7, 2013
[^1]: The action was discontinued against mortgagees Home Trust and Leal
[^2]: The counterclaim was issued for $100,000.00, reduced to $40,983.84 by order dated July 16, 2012.
[^3]: Documents filed with the court are logged into the court’s computer system.
[^4]: There is an affidavit of service in the file signed by someone named Shakeel Balroop, commissioned by lawyer Sidney Klotz, attesting to serving an affidavit of documents on Fernando Leal, who was a defendant in this action until the action was discontinued against him.
[^5]: Because the Contractor waived tax as an extra, the list shows the “all in” price for each payment
[^6]: exhibit 9
[^7]: The calculation includes tax because the Owners paid tax when they paid the CAM invoice.
[^8]: Exhibit 9
[^9]: 393 University Avenue, 6th floor, Toronto