COURT FILE NO.: CV-51439/07
DATE: 2014-03-05
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN
Sun Steel Fabricators Ltd.
Plaintiff
— and —
Tremonte Manufacturing Limited
Defendant
COUNSEL:
Licio E. Cengarle for the Plaintiff
Michael A. Handler for the Defendant
HEARD: May 13, 14, 15, 16, 21, 23, 27 and 29, 2013 and July 11, 2013.
Sosna J.
REASONS FOR JUDGMENT
[1] The plaintiff, Sun Steel Fabricators Ltd. (Sun Steel) claims $96,580.84 against the defendant, Tremonte Manufacturing Limited (Tremonte), for breach of contract pursuant to the provisions of the Construction Lien Act R.S.O. 1990 c. C. 30. (the Act).
[2] Having fulfilled its contractual obligations as Tremonte’s subcontractor for the supply and installation of structural steel in the construction of the Ajax Convention Centre, (the Project), Sun Steel claims that Tremonte has refused to pay the balance of the monies owing on the contract.
[3] Tremonte denies Sun Steel’s claim, and by counterclaim seeks $50,000.00 in damages from Sun Steel for breach of contract. Sun Steel opposes the counterclaim and asks that it be dismissed.
THE PARTIES AND THEIR RELATIONSHIPS
[4] 1082955 Ontario Limited (the Owner) is an Ontario corporation which owns the lands upon which the Ajax Convention Center was constructed. .
[5] Vrancor Development Corporation (Vrancor) was the Owner’s general contractor.
[6] Chamberlain Construction Services Limited (Chamberlain) was Vrancor’s project manager.
[7] Peto MacCallum Ltd. (MacCallum) was the structural steel inspection company hired by Chamberlain.
[8] Aaron Bruno (Bruno) was the construction manager for Chamberlain.
[9] Tremonte Manufacturing Limited (Tremonte) an Ontario corporation was Vrancor’s subcontractor for the structural steel component of the Project.
[10] Pasquilano Monteleone (Pat) is Tremonte’s principal.
[11] Sun Steel Fabricators Ltd. (Sun Steel) was Tremonte’s subcontractor for the structural steel component of the project.
[12] Balwinder Dhensa (Billy) is the president of Sun Steel.
[13] Vinod Moudgil (Vince) was the project coordinator for Sun Steel.
BACK GROUND HISTORY
[14] In August 2006, by purchase order, Chamberlain accepted a bid of $345,000.00, plus GST, from Tremonte, to provide the labour, material, and equipment to complete fabrication and installation of structural steel for the Project. Two “Extras” namely the completion of the front canopy and metal decking (Tab 2, Exhibit 2) were later added to the contract. The final contract price was $403,383.00.
[15] Tremonte then entered into an oral agreement for $339,200.00, inclusive of GST, with Sun Steel. Sun Steel was to be Tremonte’s subcontractor in accordance with the bid package negotiated between Chamberlain and Tremonte. The bid package included a Project schedule, for completion of the structural steel work on the following timelines:
Structural steel construction on the ground floor was to start no later than November 24, 2006 and be completed by December 7, 2006.
Structural steel construction on the second floor was to start December 11, 2006 and be completed by December 15, 2006.
Installation of the open web steel joist and metal deck was to commence December 14, 2006 and be completed by December 18, 2006. (Exhibit 2, Tab 3, page 20)
[16] In the agreement between Tremonte and Sun Steel, Tremonte was to have no day to day responsibilities or involvement in the work performed by Sun Steel, and Pat’s (Tremonte’s principal) only obligation was to attend site meetings and liaise between Chamberlain (the Project Manager) and Sun Steel.
[17] There were no extras included in the original agreement between Sun Steel and Tremonte. Sun Steel agrees two “Extras to the Contract” later became part of the scope of work subcontracted to them. The “Extras to the Contract” were installation of additional girts not identified in the structural steel plans, and installation of structural steel shelf angles.
[18] Despite the construction schedule which called for Sun Steel to complete all the structural steel work by December 20, 2006, Sun Steel did not start on site structural steel installation on the Project until about January 12, 2007. On May 29, 2007, five months after Sun Steel’s scheduled completion date as set out in the Project Schedule, Chamberlain, the project manager, confirmed that Sun Steel’s structural steel work including the correction of deficiencies was finalized. (Exhibit 37, Tab 2).
[19] Sun Steel did not submit written invoices to Tremonte for the material and labour it provided. However, between February 8 and July 12, 2007, Tremonte issued seven cheques to Sun Steel in the amount of $259,000.00 for work in progress.
[20] Throughout the Project, Tremonte advised Sun Steel that it and Vrancor were displeased with Sun Steel’s delays which they maintained undermined the timely and orderly completion of the Project.
[21] At the Project’s completion, Vrancor still owed Tremonte $107,081.49, pursuant to the August 2006 bid quotation. Vrancor refused to pay those monies. Tremonte in turn refused to pay Sun Steel any monies in addition to the $259,000.00 already paid, holding Sun Steel responsible for construction delays.
PROCEDURAL HISTORY SURROUNDING SUN STEEL’S CLAIM
[22] On July 17, 2007, Sun Steel registered a claim for lien against Tremonte and the Owner. The claim sought payment of $107,081.49 for supply and installation of steel pursuant to a contract or subcontract price of $403,383.00. That price reflected the $339,200.00 oral agreement, plus the $37,680.00 for “Extras”, later added to the contract. For reasons to be provided later, Sun Steel reduced its claim to $96,580.84.
[23] On August 29, 2007, the Owner posted security for Sun Steel’s Claim for Lien pursuant to section 44 of the Act.
[24] On August 30, 2007, Sun Steel issued its Statement of Claim against Tremonte and the Owner. Sun Steel pleaded that it entered into an oral contract with Tremonte to complete the scope of work described in the agreement between them, that it completed its obligations including the “Extras”, and that Tremonte was refusing to pay the amount outstanding. Sun Steel also pleaded that by supplying the aforesaid services and materials, it was entitled to a lien on the lands of the Owner for $107,081.49.
[25] On January 15, 2008, the Owner delivered a Statement of Defence and cross- claim in which it denied any liability to Sun Steel and cross-claimed against Tremonte for complete indemnity and contribution.
[26] On February 14, 2008, Tremonte delivered a Statement of Defence seeking dismissal of Sun Steel’s claim. Further by counterclaim, Tremonte sought $50,000.00 in damages for breach of contract alleging that Sun Steel failed to complete all work in a timely and professional manner, forcing Tremonte to complete Sun Steel’s work not undertaken or finished, including the “Extras” in the bid package.
[27] On February 20, 2008, Tremonte filed a Third party claim against Vrancor seeking payment of $107,081.49, and for contribution, indemnity and relief, from Vrancor for any liability that Vrancor may have to Sun Steel.
[28] On August 25, 2009, the Owner upon paying $133,851.66 into court as security for costs brought a motion pursuant to Section 44 (1) of the Act to vacate Sun Steel’s registration of the lien claim and certificate of action from title. The motion was granted.
[29] On January 12, 2010, on consent, a partial settlement was issued (Tab 38, Exhibit 2). That order dismissed the action in its entirety against the Owner and Vrancor. Furthermore it disbursed the $133,851.66 previously paid into court with $50,000.00 to be held in trust by Anthony Pascale, $50,000.00 (the lawyer for Tremonte), and the balance of the funds paid to the Owner.
POSITION OF THE PARTIES
[30] Both Sun Steel and Tremonte acknowledge that they entered into an oral contract for Sun Steel to be Tremonte’s subcontractor in the Project. Both claim against each other for breach of contract and both deny any breaches. Sun Steel seeks the unpaid balance of $96,580.84, from Tremonte asserting that it has completed its obligations as set out in the oral contract between them.
[31] Tremonte submits, if any breach is found arising from Sun Steel’s claim or its counterclaim of $50,000.00, the issue in this action is limited to the apportionment of the $50,000.00 paid out by court order on January 12, 2010, and held in trust by Tremonte’s lawyer, Anthony Pascale.
ISSUES TO BE DETERMINED
(1) If a breach of contract is made out by either party, is this action limited to the apportionment of the $50,000.00 paid out by court order on January 12, 2012 (Exhibit 2 Tab 38)?
[32] Given the conflicting evidence provided by Billy, the president of Sun Steel, and Pat, Tremonte’s principal, findings of credibility and reliability are central factors on this issue and all other issues at trial.
[33] There is no dispute that Billy and Pat were former friends and business associates who had previously entered into construction contracts with each other. Consistent with this history, Sun Steel and Tremonte did not enter into a formal written contract setting out precise terms under which Sun Steel would be Tremonte’s subcontractor for the fabrication and installation of structural steel on the Project.
[34] Pat testified that Sun Steel failed to complete the structural steel work by December 18, 2006, as set out in the Project schedule. He testified that until Sun Steel finished that work in May 2007, Vrancor repeatedly complained to Tremonte about Sun Steel’s delays. He further testified that he communicated those concerns personally and by fax to Billy and Sun Steel’s project coordinator, Vince.
[35] Prior to Sun Steel filing the lien in July 2007, Pat testified he spoke to Billy and urged Sun Steel not to proceed with any lien action. He testified he did so because he did not wish to “ruffle any feathers” with Vrancor. He testified that because Billy was adamant in filing a lien, an agreement was reached in which Billy would register a common lien on behalf of Sun Steel and Tremonte, making them allies in protecting their common interests.
[36] Because Sun Steel had not issued any invoices to Tremonte for the structural steel work on the Project, Pat testified he provided Sun Steel his invoices to register the common lien.
[37] For the following reasons, I find Pat’s evidence to be contradictory and illogical. He testified that although he and Sun Steel agreed to be common allies in a lien action, he nevertheless throughout the trial criticized and disparaged Sun Steel’s unwarranted delays in not completing the structural steel installation in a timely fashion. He testified these delays obligated Tremonte not only to intercede and complete portions of Sun Steel’s unfinished work, but that intervention was contrary to the terms of the subcontract with Sun Steel in which Tremonte’s only obligation would be to act as an onsite overseer to liaison between Sun Steel and Chamberlain. He testified Tremonte’s involvement in the project far exceeded the limited role Tremonte had contracted for.
[38] Section 39 of the Act obligates the recipient (in this case Tremonte) to provide the very information (the invoices) that Sun Steel was seeking to register a lien. Despite Pat’s evidence that he provided the invoices to Sun Steel for the sole purposes of registering a joint lien, under the Act, Tremonte was obligated to provide the invoices for registration in any event. I find it incomprehensible that Pat being experienced in the construction industry, would be unaware of not only Tremonte’s obligation to provide the invoices requested, but also unaware that under the Act a contractor and its subcontractor cannot file a joint or common construction lien because they belong to different priority classes. In light of Pat’s experience in the construction industry, I find his evidence strains credulity.
[39] Sun Steel had every right to act on its own and protect its lien rights. Since Sun Steel had no privity of contract with Vrancor to recover any monies being claimed. Pat’s evidence that he was shocked that Sun Steel also included a claim against Tremonte in its lien action lacks reliability and credibility.
[40] I further find Tremonte’s submission that the consent order (Exhibit 2, Tab 38) was predicated on Sun Steel abandoning in large part its claim against Tremonte is not supported by the evidence.
[41] Firstly, the consent order dismissing all actions against the Owner and Vrancor makes no mention of Sun Steel’s and Tremonte’s actions against each other.
[42] Secondly, Pat’s evidence of an agreement with Sun Steel for Sun Steel to abandon any part of its claim against Tremonte is not corroborated by third parties, memo, or faxes which Pat regularly forwarded to Sun Steel throughout the Project.
[43] On the other hand, Billy’s trial evidence and documentary evidence on which he relied disputes the agreement submitted by Tremonte.
[44] Billy testified in chief that he met with Pat on October 27, 2010, nine months after the consent order was finalized. In that meeting which Pat acknowledged Billy had prepared a comparative state of accounts between Tremonte and Vrancor on one side, and Tremonte and Sun Steel on the other side. (Exhibit 1, Tab 7) He testified he proposed that since Sun Steel had lost money on the Project and Tremonte did not, the entire $50,000.00 held in trust should be paid to Sun Steel. According to Billy’s evidence, Pat made no commitment and advised he had his lawyer’s fees to pay.
[45] In cross-examination, Billy denied that the dispute with Tremonte was only about the $50,000.00 held in trust but agreed if Tremonte had relinquished the entire $50,000.00 to Sun Steel; he would have abandoned his action against Tremonte in its entirety. Billy (Mr. Dhensa) testified as follows:
Mr. Handler: “So why did you have a discussion with Pat about $50,000.00?”
Mr. Dhensa: “Because I know that he got paid this much, right, $50,000.00. I said, Pat, you got $50,000.00 and you still have money in your pocket here. I’m crying and people are writing me for money to be paid and why don’t you release these funds to me, please.”
Mr. Handler: “The $50,000.00 was not given to Pat, did you understand that?’
Mr Dhensa: “Ya, but that is his lawyer’s account I think.”
Mr Handler: “Well, why did you have settlement discussions with Pat about $50,000.00? What was that about? What I am suggesting to you is that the fight, the dispute between you and Pat, the legal dispute between you and Pat was about the $50,000.00 at the point in time when this order was obtained. Do you agree or disagree?”
Mr. Dhensa: “Actually the dispute is the whole amount, but if he’s got paid only this, what am I going to do to him, you know?”
Mr Handler: “The whole amount?”
Mr. Dhensa: “Well, actually, I deserve the whole amount but if he didn’t get paid…. I’ve been honest to him, eh, you got 50, this light goes on, pay me, please.”
Mr Handler: “So is the dispute about $50,000.00 or something other than that?”
Me Dhensa: “I would have agreed at that time if he paid me the 50, I would close the chapter.”
Mr Handler: “So is dispute about, just let me finish, is the dispute about the $50,000.00 or something else?”
Mr. Dhensa: “the dispute is the whole amount, but”
[46] For the following reasons I accept Billy’s evidence.
[47] There is no evidence to support Tremonte’s submission that the construction lien claim against the Owner (Exhibit 2, Tab 38) was settled leaving $50,000.00 in trust to be resolved between Sun Steel and Tremonte because they both recognized they were vulnerable to the Owner for damages because of Sun Steel’s delays. Although Billy conceded that he did not comply with the strict timelines set out in the Project schedule, (Exhibit 2, Tab 3, page 20), there was insufficient evidence to enable me to find that either the Owner or Vrancor incurred any additional expenses or damages because of the alleged delays by Sun Steel. There was no evidence from the Owner or Vrancor that they in fact suffered any additional expenses or damages because of Sun Steel’s alleged delays.
[48] For the aforementioned reasons I find if a breach is made out either by claim or counter-claim, this action is not limited to the apportionment of $50,000.00 held in trust in accordance with the court order as set out in Exhibit 2, tab 38.
(2) Has Sun Steel proven a breach of contract by Tremonte?
[49] As previously reviewed, the following is not disputed:
(1) By purchase order dated September 26, 2006, (Tab 3, Exhibit 2) Tremonte and Vrancor entered into a contract for Tremonte to complete the fabrication and installation of structural steel for the Project. The contract price including “Extras” was $403,383.00.
(2) Tremonte subcontracted to Sun Steel the entire scope of the work it had agreed to perform for Vrancor. The total subcontracted price to Sun Steel including “Extras” was $376,833.00.
(3) To date, Tremonte has paid Sun Steel $259,000.00 for the structural steel work.
[50] I further find that the scope of work described in the purchase order (Tab 3, Exhibit 2) was completed albeit well beyond the completion date in the project schedule. Bruno, the construction manager for Chamberlain, (Vrancor’s project manager) testified that an occupancy permit had been issued for the building at the end of the Project and that the structural steel consultant, SWS Engineering Inc., had signed off on the Project. Additionally, Pat testified he had no information that the structural work had not been completed.
[51] Sun Steel submits having completed its obligations under its agreement with Tremonte, including “Extras,” Tremonte’s refusal to pay the balance of the contract price still owing is a breach of contract.
[52] Tremonte denies a breach of contract. Tremonte submits that although assured by Sun Steel that all structural steel work on the project would be completed in a professional and timely manner and in accordance with Vrancor’s requirements, Sun Steel failed to carry out those obligations.
[53] As a result, Tremonte, which was to have minimal involvement in the Project, had to continuously attend the site to address Vrancor’s concerns over the delay, deficiencies in Sun Steel’s work, and, to complete the bulk of the “Extras” requested by Vrancor which Sun Steel also delayed.
[54] Tremonte argues that despite all the structural steel work including “Extras” being completed in a good and workmanlike manner, Vrancor refused to pay Tremonte the sum of $107,081.49, the balance of the contract price between them. Given the history of Sun Steel’s negative performance on the Project, Tremonte submits that Sun Steel is not entitled to the monies owing to Tremonte by Vrancor, as Sun Steel has already received over $270,000.00 from Tremonte. Tremonte seeks that Sun Steel’s claim be dismissed.
FINDINGS
[55] Regarding the issue of delay, Billy acknowledged that he received and reviewed the project schedule (Exhibit 2, Tab 3, page 20) when he agreed to be Tremonte’s Project subcontractor.
[56] Bruno, Chamberlain’s construction manager testified as to the importance of the construction schedule, it being a detailed list of construction tasks which were to be performed by the various trades in a coordinated manner to complete the Project. He testified until these tasks were completed, other tasks and/or trades which were to follow would either be delayed or postponed. He testified that a delay in completing the tasks would have a serious negative financial impact on the Project.
[57] Sun Steel did not commence on site structural steel installation of the Project until January 12, 2007, and did not complete its tasks until May 2007, although the Project Schedule set out that that Sun Steel’s work was to be completed by December 20, 2006.
[58] Although Billy acknowledged that the Project Schedule provided the timelines and dates for all the trades to complete their work, he described that schedule to be a “dream or fantasy schedule”. He testified construction projects always run late and contractors always require sub-trades to perform the work more quickly. Sun Steel’s project coordinator, Vince, testified to the same effect.
[59] As set out in 658207 Ontario Ltd. v. Gorgi Construction Ltd. [1991] O.J. No. 998, a party agreeing to perform contractual work impliedly agrees to perform it within a reasonable period of time. What is a reasonable time is a question of fact depending on the circumstances of each case.
[60] In providing reasons for Sun Steel’s delays, Billy cited inclement weather conditions, construction safety issues, and failures by other trades to complete their tasks so that Sun Steel could carry on with its work. Tremonte submits that because these explanations are not corroborated through the testimony of others, or by timely responses by Sun Steel to the numerous complaints and threats they received regarding delay, the court reject Sun Steel’s explanations. Amongst others, the complaints forwarded to Sun Steel are as follows:
“I have been calling all morning and need to speak with you regarding balance of work. Chamberlain is threatening to back charge for non-performance and delaying???...” (Facsimile transmission from Tremonte to Billy/Vince, January 25, 2007, Exhibit 2, Tab 16, page 94)
“As discussed, I just promised the owner/Developer (Darko) that steel framing would be complete today and that deck will start and finish tomorrow. Please make sure this happens as he is not happy with our “slow” progress.” (Facsimile transmission from Tremonte to Billy, February 27, 2007, (Exhibit 2, Tab 27, page 29).
“…I was assured that the remaining steel work would be completed by 11:00 AM today…The erection crew foreman did not show, the work was not completed and the metal deck crew left…Where was the crane? … Based on the above noted facts, Arkadi was forced to cancel the wall erection for tomorrow. Tremonte did not come through, and broke yet another commitment. As discussed a $25,000.00 delay back-charge will now be applied to Tremonte’s contract. Be advised, an additional $25,000.00 delay back-charge will be issued for each day that this delay continues…”
(E-mail transmission from Bruno to Pat, February 28, 2007, (Exhibit 2, Tab 29, page 144), which was in turn, sent to Sun Steel by Pat (Exhibit 2, Tab 29, pages 142 and 143).
“…Arcadi had another steel inspection. See following inspector’s report for list of deficiencies. I have read it and it appears extensive (?) -- is this normal for this size building? -- can you please take care of this asap. I hope this does not stall owner/Chamberlain from making payment (??)-- Let me know and when do you expect to complete the floor deck.” (Facsimile transmission from Tremonte to Billy and Sun Steel, March 7, 2007, Exhibit 2, Tab 28, page 130).
[61] Tremonte submits that the concerns of delay expressed in the fax messages just reviewed, are in part highlighted by Sun Steel’s delay in the installation of the roof deck. Pat testified that sometime between January 26, 2007 and January 31, 2007, Billy informed him that he had not ordered the deck and he wanted Tremonte to order it on his behalf. On January 31, 2007, Tremonte ordered the deck from Canam Group (Exhibit 2, Tab 19, page 110). The deck was delivered on or about February 9, 2007. The project schedule budgeted three days for the deck installation.
[62] The deck installation was still not complete by February 20, 2007. In a fax message the same date Chamberlain communicated to Tremonte; “I don’t understand why they are no people working on the metal deck”. (Exhibit 2, Tab 26, page 128). As of March 7, 2007, deficiencies in the deck installation still had not been addressed by Sun Steel. (Exhibit 2, Tab 28, page 160).
[63] Billy testified that he asked Tremonte to order the deck because at that time he was “short of funds”. He testified he provided Pat with the dimensions for the deck order. He testified any noted deficiencies in the deck were subsequently properly addressed by Sun Steel.
[64] I find that although the Project schedule called for the manufacture and installation of the structural steel work to begin no later than November 24, 2006, there is insufficient evidence to enable me to find that the site was ready on that day to permit Sun Steel to commence its work. Billy testified that the site was not ready on November 24, 2006, and that he told Pat he was prepared to proceed when advised of the readiness of the construction site. As set out in Easttown Electric Co. v. Lloydmanor Construction Inc. 43 C.L.R. (2nd) 289 at para 24:
Since a sufficient degree possession of the site is clearly a necessary precondition of the contractor’s performance of his obligations, there must be an implied term the site will be handed over to the contractor within a reasonable time of signing the contract….This must particularly be so when a date for completion is specified in the contract documents…
[65] In the present matter, the completion date of December 20, 2006, for Sun Steel’s structural work was specified in the Project schedule on which Tremonte places significant reliance.
[66] Additionally, despite Tremonte’s submission that Billy’s reasons for delay are without merit, in its Reply to the Third Party action brought by Vrancor, Tremonte similarly asserted that the delays were beyond their control and being caused by “ severe weather conditions”, … the site being shut down by the Ministry of Labour as a result of Vrancor failing to comply with the Ministry of Labour standards, and [that] Vrancor and the Owner…..[made] several changes to the initial drawings which prevented Tremonte and Sun Steel from commencing its work on time.”
[67] I am satisfied that Sun Steel may have carried out the supply and installation of structural steel in the Project in a more efficient and timely fashion. I am satisfied that throughout the Project Tremonte was constantly pressured to have Sun Steel complete those tasks. However, despite non-adherence to the timelines in the Project Schedule, and Tremonte’s and/or Vrancor’s or Chamberlain’s protestations of delay, the scope of the work described in the Purchase Order from Vrancor to Tremonte was completed by Sun Steel. I accept Sun Steel’s evidence as to the cause of the delays.
[68] Further there is no evidence that the delays caused any back charges to be levied against Tremonte, although Tremonte was threatened a number of times with those levies. Lastly, there is no evidence that either the Owner or Vrancor suffered any damages because of Sun Steel’s delays.
[69] For the aforementioned reasons, I find that Sun Steel has performed its contractual obligations to Tremonte within a reasonable period of time. Tremonte’s refusal to pay Sun Steel the balance of monies under their oral contract is a breach of contract. Having found a breach and in light of Tremonte’s counterclaim, the remaining issue to be determined is what monetary recovery, if any, has either party proven.
WHAT RECOVERY IS EITHER SUN STEEL OR VRANCOR ENTITLED TO?
[70] It is not disputed that Tremonte subcontracted to Sun Steel in the amount of $339,200.00, the entire scope of the work it had agreed to perform for Vrancor. Sun Steel did not submit any invoices to Vrancor for work done including “Extras”. However, the “Extras” were completed and Vrancor and Tremonte submitted invoices to Vrancor for completion of those extras. I find the price charged to Vrancor by Tremonte for the “Extras” would be the same price Sun Steel would have charged Tremonte. I therefore find the total subcontracted price to Sun Steel, including “Extras” was $376,883.00. To date, Vrancor has paid Sun Steel $259,000.00, leaving a balance of $117,883.00.
[71] As previously reviewed, Sun Steel agrees that although the supply of the roof deck (an Extra) was included in their subcontract with Tremonte, it was Tremonte that made that purchase in the amount of $21,302.16. Sun Steel submits this amount is to be deducted from the balance of $117,883.00. Therefore Sun Steel claims it is entitled to recovery of $96,580.84.
[72] Tremonte’s counterclaim seeking $50,000.00 is grounded in breach of contract. It alleges that because Sun Steel failed to carry out its work in a timely and professional manner, Tremonte was required to purchase material and send its own crew to complete some work on Sun Steel’s behalf. Relying on the doctrine of “set-off’, Tremonte submits that Sun Steel agreed that these costs and expenses borne by Tremonte would be deducted from monies otherwise due and owing under the subcontract.
[73] Sun Steel submits it has completed all that it was hired to do and denies that Tremonte expended any costs in performing or completing Sun Steel’s contractual obligations in the Project. Sun Steel denies any agreement with Tremonte that it agreed that Tremonte’s costs and expenses for performing Sun Steel’s contractual obligations would be deducted from the oral contract with Tremonte. Sun Steel further submits that any amount claimed by Tremonte pursuant to any agreement allegedly made with Sun Steel concerning a credit for the cost of labor and material supplied by Tremonte is barred by the Statute of Limitations.
FINDINGS
[74] When pressed in cross-examination to provide a breakdown of what Tremonte’s $50,000.00 counterclaim consisted of, Pat testified that because of Sun Steel’s delays and poor performance the $50,000.00 was a global figure for all the combined headaches and hardships his company and he had suffered throughout the Project, and, for the grief that the Project has caused to Tremonte’s name and reputation.
[75] This Court will not exercise its discretion what in essence is a $50,000.00 claim for exemplary or punitive damages sought by Tremonte, since that relief was not pled, nor were those damages proven. There was no evidence adduced in support of the allegations of hardship and loss of reputation alleged by Tremonte and how the value of those losses was established.
[76] This judgment will only review the evidence relevant to the compensation or set-off, submitted by Tremonte in its counterclaim. Specifically, Tremonte is seeking compensation or set-off for the following:
(a) the supply and installation of the girts;
(b) the supply of angle irons and fasteners for precast concrete stairs and landings;
(c) marked up price for purchase of roof deck;
(d) materials and labor for fabrication of roof screens; and
(e) the account of Roy Brown Engineering, dated December 28, 2006.
(A) The Supply and Installation of the Girts
[77] Pat testified that during the Project he was advised by Chamberlain that additional girts not identified in the structural steel plans and specifications were required. Pat testified he asked Sun Steel to provide a price for the additional girts but received no response. Billy testified he did provide a price albeit verbally.
[78] Although both Sun Steel and Tremonte agree that Sun Steel supplied and installed the additional girts, Pat testified that Vince advised him that because of Sun Steel’s poor performance on the Project and problems Sun Steel created for Tremonte with Chamberlain, Sun Steel would not charge Tremonte for supply and installation of the additional girts. Vince denied making that commitment on behalf of Sun Steel.
[79] As part of Sun Steel’s claim for the unpaid balance of $96,580.84, $33,867.00 relates to Sun Steel’s supply and installation of the girts an “Extra” to their oral contract. Tremonte invoiced Vrancor $33,867.00 for the completion of the extra girts (Exhibit 2, Tab 7, page 61). Vrancor has not made that payment.
[80] Sun Steel having supplied and installed the extra girts seeks payment for its services from Tremonte. Tremonte argues because it had no agreement as to price with Sun Steel for the supply and installation of the additional girts, and Vince’s agreement that Sun Steel would not charge Tremonte for the extra girts, the $33,867.00 is not owed to Sun Steel under their oral contract.
[81] For the following reasons, I dismiss Tremonte’s submission and find $33,867.00 is owed to Sun Steel, being part of Sun Steel’s claim of $96,580.84.
[82] It would make little commercial sense for Sun Steel to fully complete an “Extra” of over $33,000.00 without forecasting a price to Tremonte. I accept Billy’s evidence that he discussed a price with Pat and thereafter Sun Steel supplied and installed the extra girts, even in the absence of an invoice from Sun Steel to Tremonte. Sun Steel’s bewildering practice of not presenting invoices for this “Extra” is consistent with the absence of invoicing Tremonte for the other tasks completed as Tremonte’s subcontractor. In any event, the absence of written documentation or invoices from Sun Steel had no bearing on Tremonte paying Sun Steel $259,000.00 for other work completed.
[83] I accept Billy’s and Vince’s evidence that as Sun Steel’s project coordinator Vince did not have the authority to agree to discount over $33,000.00 from the oral agreement between Sun Steel and Tremonte. At best, Vince may have been authorized to discuss pricing with Pat, but not authorized to agree to a price or for that matter to agree to discounts on behalf of Sun Steel. Furthermore, I accept Vince’s evidence that at no time did he extend such a discount to Tremonte.
[84] Being a generous discount, Tremonte did not confirm in writing to Sun Steel that an agreement for discount had been reached with Vince, despite all other negotiations involving price in the subcontract being negotiated exclusively by Pat and Billy. For these reasons, I find the $33,867.00 for Sun Steel’s supply and installation of the extra girts is not to be deducted from the subcontract between Sun Steel and Tremonte.
(B) The Supply of Angle Irons and Fasteners for Precast Concrete Stairs and Landings
[85] Pat testified that Tremonte supplied and installed the angle irons and fasteners because he could not reach Sun Steel and there was urgency to get that work completed. He testified he had no choice but to prepare the material himself and dispatch a crew to install the parts. Tremonte issued a Work Order to Chamberlain dated January 25, 2007 (Exhibit 2, Tab 5, page 56). On March 1, 2009, he invoiced Sun Steel $3,675.00 (Exhibit 2, Tab 8, page 63) for that work. He agreed he did not provide Sun Steel a list of materials or their prices, and testified he did not discuss costs with anyone from Sun Steel until sometime after the work was completed.
[86] Vince, Sun Steel’s project coordinator, identified the Work Order (Exhibit 2, Tab 8, page 63) as an “Extra” to the contract which he testified Sun Steel completed and not Tremonte. He specifically recalled Sun Steel performing the work, because the plans earlier called for steel stairs and landings but were changed to precast concrete. As a result, shelf angles and fasteners were needed to support the precast landings. He testified that as Sun Steel’s project coordinator it was his responsibility to be aware of all work performed by Sun Steel. He was emphatic that there was no reason for Tremonte to have installed the angles and fasteners since Sun Steel had them readily available and in stock.
[87] I accept Vince’s evidence over Pat’s for the following reasons. As Sun Steel’s project coordinator he had a specific and certain recollection of why shelf angles and fasteners were later required in the Project; that Sun Steel had those materials in stock; and that Sun Steel as part of its contractual obligation installed the items. His detailed evidence was not undermined in cross-examination.
[88] On the other hand, Pat’s evidence only generally set out that Tremonte was compelled to intervene on behalf of Sun Steel to install the shelf angles and fasteners because of urgency arising from Sun Steel’s delays in the Project, and Sun Steel’s failure to respond to that urgency. However, when taking over Sun Steel’s contractual obligation to supply and install the angles and fasteners, Tremonte did not request or obtain a change order from Sun Steel to perform that work thereby changing the scope of their contract, and did not provide invoices for their purchase of materials, or time sheets for fabrication work and installation of the shelf angles and fasteners at trial.
[89] For the aforementioned reasons I dismiss Tremonte’s submission that Sun Steel’s claim for breach of contract be reduced by $3,675.00.
(C) Marked Up Price for Purchase of Roof Deck
[90] Both parties agreed that at Sun Steel’s request, as Sun Steel was short of funds, Tremonte ordered and paid for the fabrication of the roof deck. There is no dispute that on or about February 12, 2006, Tremonte paid $21,302.16 for the fabrication (Exhibit 2, Tab 19, page 112). By invoice dated March 1, 2009, (Exhibit 2, Tab 8, page 64) and received by Sun Steel on June 28, 2010 as part of Tremonte’s Affidavit of Documents, Tremonte invoiced Sun Steel $26,250.00, inclusive of GST for the fabrication.
[91] Pat testified there was no agreement between him and Billy on the price Tremonte would charge Sun Steel for supplying the roof deck. He testified the marked up price forwarded to Sun Steel was reasonable since Tremonte was required to verify dimensions and coordinate delivery of the deck to the site. He testified those duties fell to Tremonte because Sun Steel had failed to carry out its subcontract responsibilities.
[92] He further testified that it was common for contractors to charge a 10% markup on account of overhead, and, a further 10% markup on account of profit. Pat testified the present mark-up was less than that.
[93] Although there was no meeting of the minds on the price to be charged, Tremonte submits it makes no commercial sense for it to have ordered the roof deck when it was not its responsibility to do so. Tremonte submits the mark-up is fair and reasonable, or, in the alternative proven on a quantum meruit basis.
[94] Sun Steel submits that the only amount to be deducted from its claim is $21,302.16 which is what Canam charged Tremonte for the fabrication of the deck.
[95] For the following reasons I accept Sun Steel’s submission.
[96] Whether Tremonte’s order and payment for the deck makes commercial sense or not, given Pat’s evidence that he was threatened with back charges because of Sun Steel’s delays, I find it makes common sense for Tremonte to order the deck being advised that Sun Steel was short of funds at the time. That order at that time addressed the immediate concerns of both Sun Steel and Tremonte. I find submitting an arbitrary markup on a price then unknown in these circumstances is not reasonable. Nor does the doctrine of quantum meruit apply, as a claim for reasonable value of services rendered. I do not find Tremonte’s arbitrary mark-up has any application to the doctrine of quantum meruit.
[97] I further reject Pat’s evidence that the mark-up is justified because of his preparation of the dimensions for the deck which were forwarded to the manufacturer. Vince testified that Sun Steel provided Tremonte with the detailed dimensions for ordering the deck as that information was included in Sun Steel’s drawings for the deck erection plans. Pat denied that information was provided by Sun Steel and testified it was he who prepared sketches for the roof. No sketches were introduced at trial.
[98] When asked at trial what information he provided the manufacturer, Pat replied it was not precise and only set out dimensions. In reviewing Exhibit 2, Tab 19, page 110, Tremonte’s order for fabrication of the roof deck, I find the details for fabrication set out inconsistent with Pat’s evidence. The order is specific and highly precise, providing numerous individual dimensions for the fabrication of multiple parts which comprised the roof deck. I further accept Vince’s evidence that the specifications in the order were not prepared by Pat, but, provided to Tremonte by Sun Steel since that information was set out in in the drawings for the deck erection plans held by Sun Steel.
[99] Lastly, Pat’s evidence is additionally undermined when he originally testified that he had not discussed with Sun Steel adding a mark-up, but later testified that he had. I accept Sun Steel’s evidence that a mark-up was never discussed.
[100] I therefore find as submitted by Sun Steel that $21,302.16 is to be deducted from Sun Steel’s contract with Tremonte.
(D) Material and Labour for Fabrication of Roof Screens.
[101] The fabrication and installation of the roof screens was part of the main contract awarded to Tremonte and sub-contracted to Sun Steel. Tremonte alleges that Sun Steel was behind schedule and too busy to manufacture the roof screens. With Sun Steel’s knowledge and permission, Tremonte submits it manufactured the roof screen partially completed Sun Steel. By invoice dated March 1, 2009, Tremonte sought payment of $16,800.00 from Sun Steel for completing the fabrication of the roof screens which both parties agree Sun Steel later installed.
[102] Sun Steel claims that it fabricated the roof screens and denies that Tremonte had any involvement in that fabrication.
[103] For the following reasons I dismiss Tremonte’s claim.
[104] Pat testified that in a telephone conversation Billy told him to build the roof screens because Sun Steel was too busy. Pat testified there was no discussion about price because it was understood the price would be fair value and would be deducted from monies owed under contract. Billy denies that conversation.
[105] As with the angle irons and fasteners, Tremonte forwarded an invoice to Sun Steel for the alleged work almost two years after the fabrication of the roof screens was completed. That invoice requesting a global payment of $16,800.00 did not set out time sheets for production and other than a purchase order for metal tubing in the amount of $1,700.34 (Exhibit 2, Tab 30, page 154), did not set out an itemized list and cost of other materials used for fabrication. Additionally, as with the angle irons and fasteners, Tremonte did not submit any change order to have them perform the roof screen fabrication which Sun Steel was contractually obligated to complete and there is nothing in writing from Sun Steel authorizing the transfer of that work to Tremonte.
[106] Both Billy and Vince testified that all the materials required for fabrication of the roof screens were in their shop and Billy identified Exhibit 1, Tab 17, page 186 as the list of materials he sent to various suppliers for a quotation. He testified that Sun Steel fabricated the roof screens for the Project. Vince testified that it was he who ordered the material for the roof screens, that Sun Steel had all the drawings to fabricate the steel, and that Sun Steel rolled and sized the steel. When he examined Exhibit 2, Tab 30, pages 146 to 152 the sketches that Pat testified he used to fabricate the roof screens, Vince testified it would be impossible to fabricate the roof screens with those diagrams and much more information than what was set out would be needed.
[107] I accept the evidence provided by Pat and Billy. For these reasons I find Tremonte has not satisfied its onus of proving that the contract terms with Sun Steel were amended to have Tremonte fabricate the roof screens. Further, I find that the fabrication of the screens was not performed by Tremonte. The payment of $16,800.00 sought by Tremonte for those services is dismissed.
(E) The Account of Roy Brown Engineering, dated December 28, 2006
[108] Billy and Pat acknowledged that Roy Brown prepared the drawings and joist designs for the Project and had provided services to them in the past in other projects. Under cross-examination Vince testified that Sun Steel was as set out in the sub-contract, responsible for the preparation of the drawings for the joist system in the Project. However, Roy Brown’s invoice (Exhibit 2, Tab 6, page 57) dated December 28, 2006, in the amount of $1,272.00 was forwarded to Tremonte and not Sun Steel.
[109] Pat testified that he was asked by Billy to pay Roy Brown’s account and did so. He testified he intended to deduct Roy Brown’s account from the sums which were otherwise owing to Sun Steel for its work on the Project. Billy denied requesting Tremonte pay any account from Roy Brown. Pat had no explanation why Roy Brown issued the invoice to Tremonte and speculated it was an honest mistake. Roy Brown was not called at trial.
[110] Tremonte submits that having paid Roy Brown’s account for services provided to Sun Steel, that account for $1,272.00 should be deducted from any sum that Tremonte would otherwise be owing to Sun Steel for its work in the sub-contract.
[111] Sun Steel submits that Tremonte’s claim for compensation for Roy Brown’s account is statute-barred pursuant to the provisions of the Limitation Act. Sun Steel argues even if a promise was made by Sun Steel to repay Tremonte for Roy Brown’s account, which it denies, that claim cannot be considered a breach of the oral contract between Sun Steel and Tremonte as it is outside the parameters of Tremonte’s counterclaim in this action. Sun Steel submits that Tremonte’s failure to commence an action to recover Roy Brown’s account be dismissed because it failed to commence the action by December 28, 2008.
[112] Tremonte argues the Limitation Act defence is not made out. Tremonte submits its counterclaim dated February 14, 2008, is a sufficient demand for payment and thereby nullifies any limitation defence.
[113] For the purposes of this judgment it is not necessary to consider whether the Limitation Act, applies or not. In the absence of evidence from Roy Brown why his account was sent to Tremonte, I find that the invoice was sent to the right client. In these circumstances I find Tremonte has failed to satisfy the onus of proving its claim on the balance of probabilities. Therefore the claim is dismissed.
[114] I further dismiss Tremonte’s submission that as a component of its counterclaim it be awarded $20,000.00 because of Sun Steel’s breaches of its subcontract obligations which resulted in Tremonte having to expend time for coordination and supervision of various aspects of the structural steel work which were not Tremonte’s contractual responsibility.
[115] Evidence in support of this claim was provided by Pat. I found his evidence to be self-serving, selective, and in the absence of other corroborating evidence, (time sheets, cost estimates, etcetera), unreliable. His evidence on this issue and the other grounds submitted in the counterclaim do not meet the balance of probabilities test to grant the monetary relief sought.
[116] If the parties cannot agree on costs, written submissions are to be forwarded to the Trial Coordinator within 30 days of release of the judgment, by the plaintiff, Sun Steel. The defendant, Tremonte, will have 15 days thereafter to respond. Sun Steel will have 10 days thereafter to respond.
The Honourable Mr. Justice A. Sosna
DATE RELEASED: March 5, 2014