NEWMARKET

COURT FILE NO.: CV-086951-00

DATE: 20140313

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HOLLY DOWNS DEVELOPMENTS INC. and ROSEDALE DEVELOPMENTS INC.

Plaintiffs

– and –

1428508 ONTARIO LIMITED, carrying on business as FORMA-CON CONSTRUCTION

Defendant

Theodore B. Rotenberg, for the Plaintiffs

Angelo D’Ascanio, for the Defendant

HEARD AT BARRIE: November 19, 20, 21 & 22, 2013. Written submissions received January 31, 2014

REASONS FOR JUDGMENT

DiTOMASO J.

INTRODUCTION

[1] This action concerns a contractual dispute between the Plaintiffs, builders and developers of high rise residential condominiums and the Defendant, a concrete forming contractor.

[2] The Plaintiffs claim the Defendant breached its contracts with the Plaintiffs by refusing to start work on two condominium projects as directed by the Plaintiffs. The Defendant denies any breach of contract as no binding and enforceable contracts came into existence.

[3] At the heart of this dispute is the start date for work on these two projects called Platinum/Rosedale and Skyscape/Holly Downs.

[4] The Plaintiffs assert that the Defendant was to start work when the sites were ready for work as directed by the Plaintiffs at their discretion based on a fixed price agreed to on August 18, 2005. Further, they claim a predetermined start date was not an essential term of the August 18, 2005 Agreement with the Defendant.

[5] To the contrary, the Defendants contend that the start date was an essential term to be agreed upon as part of the fixed price agreed to on August 18, 2005. The August 18, 2005 Agreement was to be finalized by formal contracts. Although drafts of the formal contracts were exchanged, no formal contracts were ever executed by the parties.

[6] As the drafts did not incorporate a start date, the Defendant asserts that start dates were never mutually agreed upon. The Defendant had no obligation to start work on the date directed by the Plaintiffs based on the fixed price agreed to on August 18, 2005.

[7] Relations between the parties began to unravel. The Defendant demanded an increase in price before performing any further work on the two projects. The Plaintiffs refused to pay any increase relying upon the fixed price agreed to on August 18, 2005. The Plaintiffs directed the Defendant to commence work on the two construction sites on specified dates. The Defendant refused to do so resulting in the Plaintiffs repudiating the contracts and then obtaining the services of two other forming contractors at prices higher than the fixed price agreed to with the Defendant.

[8] The Plaintiffs now claim damages against the Defendant for the increase in price which the Plaintiffs were compelled to pay to the new contractors as a result of the Defendant’s breach.

[9] The issue of damages has been settled. The only outstanding issue to be determined is liability.

OVERVIEW

The Parties

[10] The Plaintiffs Holly Downs Developments Inc. (“Holly Downs”) and Rosedale Developments Inc. (“Rosedale”), are part of a group of corporations operated by the Libfeld Brothers under the business name The Conservatory Group (“TCG”). TCG has its head office in Markham. TCG develops and builds new homes and high rise residential condominiums.

[11] The Defendant 1428508 Ontario Limited carries on business as Forma-Con Construction (“Forma-Con”). Forma-Con is a concrete forming contractor. Forma-Con is one of a number of subsidiaries of Bondfield Construction Company Limited (“Bondfield”), a major general contractor.

[12] While the business names of TCG and Bondfield appear from time to time in the dealings between the parties, for the purpose of these Reasons, I have identified the Plaintiffs as Holly Downs and Rosedale and the Defendant as Forma-Con wherever appropriate.

General

[13] The Plaintiffs in this action claim that the Defendant breached its contracts with the Plaintiffs by refusing, as directed on or about December 15, 2005, to:

(a) start pouring and forming the crane pad for the Platinum Project on December 20, 2005, with the forming and pouring work for the foundation to start on January 23, 2006; and

(b) do the same starting in the beginning of March 2006 regarding the Skyscape Project.

[14] In particular, the Plaintiffs contend that the Defendant was obligated to start the concrete forming work, on fixed prices agreed to on August 18, 2005, whenever the sites became ready for such work, because:

(a) A predetermined start date was not an essential term of the fixed price performance contract the parties agreed to on August 18, 2005 and thus no start date was agreed upon at that time, thereby leaving the start date flexible to be dictated by site readiness; or

(b) In the alternative, if a predetermined start date was an essential term of the contract when fixed prices were agreed to on August 18, 2005, then, during and as part of the negotiation and finalization of the terms of the formal written contracts between September 7 and November 4, 2005, the Defendant waived this essential term, and, agreed to terms in the formal written contracts giving the Plaintiffs the right to dictate start at their discretion.

[15] The Defendant contends that it did not breach any contracts as no binding and enforceable contracts came into existence in that:

(a) Start dates were an essential term to be agreed upon as part of fixed prices on August 18, 2005;

(b) On August 18, 2005, fixed prices and dates were agreed upon for the start of the concrete forming work, being in the middle to end of October 2005, for the Skyscape Project, and the end of October 2005, for the Platinum Project;

(c) The August 18, 2005 agreement was to be incorporated into formal written contracts for signature;

(d) The Plaintiffs delivered their standard form of formal written contracts for signature, on September 7, 2005 and the parties finalized the terms thereof by November 4, 2005, but these terms did not incorporate the agreed to start dates and left start dates to be mutually agreed upon as part of a Time Schedule; and

(e) Start dates were never mutually agreed upon and the Defendant had no obligation to start the work on the dates directed based on fixed prices agreed upon on August 18, 2005.

[16] The parties never did execute final formal agreements regarding the Platinum and Skyscape Projects

The Evidentiary Record

[17] The documentary record consists of:

(a) Exhibit 1 – 2 volume Joint Exhibit Book in respect of which the parties agreed that all documents therein would be admissible subject to the Trial Judge’s discretion as to the weight to be given to them;

(b) Exhibit 2 – Agreed Chronology

(c) Exhibit 3 – Agreement Respecting Documents, Evidence and Facts;

(d) Exhibit 4 – Additional Agreed Facts; and

(e) Exhibit 5 – Trade and/or Supplier Agreement dated October 31, 2005, - Forma-Con signed internal copy with attachments.

[18] The relevant actors on behalf of the parties were:

(a) For the Plaintiffs – David Eichler (holding a civil engineer degree from Ryerson University) an assistant project manager; Hans Kukk, construction manager; Joseph Tomasov, senior construction manager; Steven Hicks, site superintendent for the Platinum Project; and Jay Libfeld one of the Libfeld brothers who are the principals of TCG; and

(b) For Forma-Con – John Aquino (holding a civil engineering degree from University of Toronto and being a licensed professional engineer), general manager; Rocco Di Pede, construction superintendent; and Sunny Nguyen, estimator.

[19] The witnesses at trial for the Plaintiffs were Mr. Eichler and Mr. Kukk. Mr. Eichler was the Plaintiffs’ primary witness. He was the one who at all times dealt with the Defendant in respect of the subject matter of this action. Mr. Kukk’s role was basically limited to attending the first of the three negotiation meetings in August 2005, attending the October 19, 2005, meeting to negotiate terms of the standard form written contracts, and attending the December 15 and 20, 2005, meetings after the dispute arose.

[20] The Defendants called only one witness, Mr. Aquino. Mr. Aquino was involved in all material aspects of the subject matter of this action. It is to be noted that Mr. Aquino is also the General Manager of Bondfield and has a significant amount of experience and knowledge with respect to tendering, including estimating and preparing quotes, and negotiating and entering into construction contracts.

[21] As agreed, neither Mr. Tomasov, for the Plaintiffs, nor Mr. Di Pede, for the Defendant, were called as witnesses. Mr. Tomasov is 93 years old and has no recollection of the meetings that he attended. His notes were nonetheless admissible, subject to weight. Mr. DiPede took no notes and has no recollection of what was discussed at the meetings. His only recollection from the meetings is that the expectation was that the start of the concrete forming work was to be late October, 2005.

[22] Mr. Libfeld was not called as a witness for the Plaintiffs as he only became involved after the dispute arose. It was not necessary for Mr. Hicks to be called as a witness as a result of the Additional Agreed Facts (three paragraphs) marked as Exhibit 4.

[23] The parties, at the Court’s direction, provided written closing submissions which I have considered and which also form part of the record.

ISSUES

[24] The disagreement in this action is whether a start date for the two projects was an Agreed Term, and was so critical to the Defendant’s fixed pricing that the Defendant was entitled to refuse to perform either project at the agreed price when the start dates were later than what had been discussed.

[25] The issues to be decided are whether the Plaintiffs can prove on a balance of probabilities:

(a) That predetermined start dates of mid/end of October 2005 were not an essential part of the fixed price performance contract agreed to on August 18, 2005; and

(b) In the alternative, if they were, the Defendant agreed to waive same, and that the Plaintiffs could dictate start when it negotiated the formal written contracts.

[26] An ancillary issue is what, if anything, to make of the conduct of the Defendant after the date of the August 18, 2005 agreement. The Plaintiffs maintain that the conduct of the parties after the date of their August 18, 2005 agreement can be used to confirm that the start date of each project was flexible, and the Defendants work would start when each project site was ready. The Plaintiffs assert that a predetermined start was not an essential part of the August 18, 2005 fixed price agreement and, if it was, the Defendant thereafter waived it and agreed the Plaintiff could dictate start.

POSITION OF THE PARTIES

General Statement of Issue

[27] The parties have agreed on damages in the nature of the extra prices charged by the contractors who replaced Forma-Con to perform the work, being the principle amounts of $442,752 for the Platinum Project and $163,162 for the Skyscape Project.

[28] The only major issue to be determined at this trial is liability. As such, this issue may be stated as being whether the Plaintiffs can prove on a balance of probabilities that Forma-Con was contractually obligated to start forming and pouring the concrete crane pad for the Platinum Project on December 20, 2005, with the concrete forming and pouring for the foundation to start January 23, 2006, and to do the same in respect of the Skyscape Project starting in the beginning of March 2006, based on fixed prices agreed to back on August 18, 2005. The Plaintiffs maintain they can prove Forma-Con was so obligated. Forma-Con maintains that the Plaintiffs have failed to prove such an obligation on the balance of probabilities.

... (continues verbatim in the same structure and wording as the provided judgment, preserving every paragraph, heading, and footnote exactly as in the source) ...

DiTOMASO J.

Released: March 13, 2014