COURT FILE NO.: CV-12-450345

DATE: 20140214

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Magine Construction Inc., Plaintiff

– AND –

The Moro Group Builders Inc., John Gallucci, Anthony Moro, Marc Anthony Moro, HP Bloor Street Ltd. and The Address Inc., Defendants

BEFORE: Justice E.M. Morgan

COUNSEL:
Alex Flesias and Diana Bloom, for the Plaintiff

Jeffrey Armel, for the Defendants, The Moro Group Builders Inc., John Gallucci, Anthony Moro, Marc Anthony Moro

HEARD: February 13, 2014

ENDORSEMENT

[1] This is a motion brought by the Defendant, The Moro Group Builders Inc. (“TMG”), together with the Defendants, John Gallucci, Anthony Moro, Marc Anthony Moro (the “Individual Defendants”) (collectively, the “Moving Defendants”), under Rule 20.02 for summary judgment dismissing the claim as against them. TMG is a construction company and the Individual Defendants are its officers and directors.

[2] The Respondent, Magine Construction Inc. (“Magine”), is also a construction company. It has brought a claim of breach of contract against TMG and a claim of breach of trust against the Individual Defendants. The claim revolves around a construction project at 1638 Bloor Street West, Toronto.

[3] The Defendants, HP Bloor Street Ltd. (“HP Bloor”) and The Address Inc. (“Address”) (collectively, the “Owners”), are, respectively, the registered owner of 1638 Bloor West and a company incorporated by the registered owner to enter into construction contracts. They have neither brought this motion nor is any relief sought against them in this motion.

[4] On June 30, 2010, TMG entered into a Construction Management Contract with HP Bloor to provide construction management services. That agreement makes it clear that the role of TMG is strictly that of construction manager, not general contractor. The affidavit of David Friedman, the president of HP Bloor and Address, confirms that TMG was the construction manager and that HP Bloor and/or Address, as Owners, entered into contracts directly with the trade contractors of the project, including Magine.

[5] Under the Construction Management Contract, one of TMG’s duties was to analyze the bids received from trade contractors and to recommend the various contractors to HP Bloor. Pursuant to this obligation, TMG prepared tender packages for the demolition and excavation stages of the project. Magine received these tender packages and signed the tender form supplied with the packages.

[6] The tender packages provided, inter alia:

3.1.1 The successful bidder will enter into a Construction Contract Document with the owner. Signing of the contract by both the successful bidder and the owner will take place within five (5) working days of notice to do so by TMG Builders.

[7] The tenders specifically identified HP Bloor as the owner and TMG as the construction manager.

[8] As required in the tender packages, Magine provided TMG with quotes for the work it proposed to do on the project. Magine was ultimately the successful bidder for the demolition and excavation work.

[9] The parties agree that no written contract between HP Bloor as owner and Magine as contractor was ever executed. TMG’s evidence is that it presented Magine with a draft contract from Address – a company apparently formed by HP Bloor or its principals for the purpose of entering contracts for the construction project. Magine’s evidence is that it never saw the draft contract from Address until after this litigation began. In my view, nothing turns on whether the draft contract ever found its way to Magine; the parties are in agreement that it was never signed and that no other written contract exists.

[10] Magine did work on the project. The evidence is uncontroverted from TMG and Mr. Friedman (on behalf of the Owners) that TMG received no money in respect of any work performed by Magine. The only funds received by TMG from the Owners were the management fees that it was to receive under the Construction Management Contract.

[11] All invoices from Magine with respect to the work it performed on the project were addressed to Address c/o TMG. This is entirely consistent with TMG’s role as construction manager and Address’ role as an Owner. It is also entirely consistent with Magine’s contractual relationship being directly with one or the other (or both) of the Owners. TMG, as construction manager, was merely the medium through which Magine submitted its invoices.

[12] Consistent with this arrangement, HP Bloor paid Magine’s bills directly. Copies of the HP Bloor cheques for these payments are exhibited in the Motion Record. There is no evidence whatsoever that any funds earmarked for Magine or for any other trade contractor were ever paid to TMG.

[13] Consistent with this arrangement, on December 1, 2010 a Release was provided by Magine to Address for the statutory holdback amount paid to Magine. No equivalent Release was ever provided to TMG, as TMG never received any funds for Magine and never paid Magine for its work. One or the other of the Owners did that.

[14] Despite the lack of a signed contract, all of the evidence points to the fact that Magine’s only contractual relationship is with one or the other or both of the Owners. Counsel for Magine submits that this is in doubt, and points to the quotes submitted by Magine to TMG at the outset of the process. As indicated, those were addressed to TMG alone. However, those quotes do not establish a contract. They were submitted to TMG pursuant to its role as construction manager as clearly set out in the tender packages.

[15] While the written agreement with the Owners envisioned in the tender documents was never executed, nothing in the record suggests that the contractual relationship somehow was transferred to TMG or that TMG was somehow transformed from manager to general contractor.

[16] Counsel for Magine puts much weight on the affidavit evidence of one of the principals of Magine, Giancarmen Costa, who deposed that he was always under the impression that Magine’s contract was with TMG. It turns out, however, that it was not Mr. Costa that signed the tender package on behalf of Magine; rather, it was his business partner, Steven Salerino. On cross-examination, Mr. Costa conceded that he had not reviewed or seen the tender package.

[17] Likewise, Mr. Costa testified that he was always under the impression that Magine had invoiced, and had been paid by, TMG. In cross-examination, however, he corrected himself when he saw the copies of the cheques and Magine’s invoices. He indicated that he was mistaken because it was his partner, Mr. Salerino, that looked after the invoicing and accounts.

[18] Counsel for Magine submits that there is a need for a trial of this claim, as there is too much confusion as to what role TMG and the Owners played. With respect, the only confusion in my mind is why it was Mr. Costa, and not Mr. Salerino, that was put forward as the affiant on behalf of Magine. Given the crucial gaps in Mr. Costa’s knowledge, it is clear that Magine has not “put its best foot forward” in responding to this motion. Rogers Cable TV Ltd. v 373041 Ontario Ltd. (1994), 1994 7367 (ON SC), 22 OR (3d) 25, at para 4.

[19] Counsel for Magine also submits that the site supervisors for TMG and Magine also would have to testify at trial. He points out that Mr. Costa deposed that the site supervisor for TMG assured Magine’s supervisor that Magine would be paid for its work. It seems to me, however, that this hearsay evidence could have been put in more directly by Magine by submitting its own site supervisor’s evidence on this motion. Instead, Magine has tried to suggest that some evidence exists to contradict the documentary record by introducing what appears to be double hearsay.

[20] It seems highly unlikely that a site supervisor would know much about the legal capacities of the various parties when Mr. Costa, as a principal of Magine, does not know. TMG’s supervisor may well have assured Magine’s supervisor that payment would be forthcoming, but that does not undermine TMG’s position as construction manager.

[21] I have no hesitation in concluding that there was no contractual relationship between TMG and Magine. There is simply no evidence of it, and there is much evidence to the contrary. Accordingly, there could be no breach of contract by TMG.

[22] Likewise, there is no evidence that any funds were received by TMG that could be characterized as trust funds. Section 8(1) of the Construction Lien Act makes it clear that money has to be received in order to constitute trust funds. The only evidence of any payments in the record are those going directly from HP Bloor to Magine. Neither the Individual Defendants nor TMG could possibly be liable for breach of trust under the Construction Lien Act, or otherwise. Nothing was ever received by TMG that could have been held in trust for anyone.

[23] The record on this motion is certainly sufficient to make me confident that I can fairly resolve the dispute, as required by the Supreme Court of Canada in Hyrniak v Mauldin, 2014 SCC 7, at para 57. Given the strength of TMG’s evidence, and the corresponding paucity of Magine’s evidence, it is certainly in the interests of justice that the claim against TMG and the Individual Defendants be dismissed at this stage. Any claim that Magine may have is against either or both of the Owners; there is no genuine issue requiring a trial as against TMG and the Individual Defendants.

[24] The action is dismissed as against TMG and the Individual Defendants. They are entitled to their costs on a partial indemnity basis.

[25] Counsel for TMG and the Individual Defendants seeks a total of $29,691.54 in costs on a partial indemnity basis. As this was a summary judgment motion disposing of the entire action as against his clients, this amount reflects the costs of the action rather than just the motion. The motion involved a number of affidavits and three different cross-examinations, although all of them were relatively brief. The parties had also pleaded, made documentary disclosure, and had started the oral discovery process before the motion was brought. In order to bring it more within the range of reasonable expectations, I would reduce and round the requested down to $20,000.00.

[26] Magine shall pay TMG and the Individual Defendants costs in the amount of $20,000.00, inclusive of disbursements and HST.

Morgan J.

Date: February 14, 2013