ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-09--383197
DATE: 20140613
BETWEEN:
MANCUSO PAVING LIMITED
Plaintiff
– and –
HOLLINGWORTH SERVICES INC.
Defendant
Mark Adilman, for the Plaintiff
Robert W. Collins, for the Defendant
HEARD: April 28, 2014
b. p. o’marra j.
judgment
overview
[1] In the spring of 2008 the parties agreed on contracts for work to be performed at Canada Post sites located on Midland Avenue in Toronto and on Beaver Creek in Richmond Hill. In August of 2008 the defendant was invoiced for both projects being $74,970.00 for Midland and $3,150.00 for Beaver Creek. In March of 2009 the defendant paid the plaintiff $30,000.00 towards the Midland project. The balance for both sites remains outstanding.
The action
[2] The plaintiff applies under the Simplified Procedure in Rule 76 for payment of the outstanding sums and other relief.
[3] The defendant pleads that the work done was not in accord with the contract and was of poor quality. The defendant denies he is indebted to the plaintiff and relies on the doctrine of set off. By counterclaim the defendant seeks $90,000.00 for remedial work on the Midland project.
the evidence
[4] Leo Graci is the president of Mancuso Paving. That company specializes in repair and replacement of commercial parking lots. Claudio Sarracini is the president of Hollingworth Services Inc. He is a general contractor and construction manager for major projects. Mr. Graci and Mr. Sarracini and their respective companies had a long standing positive business relationship. The plaintiff described the defendant as a good customer who paid his invoices promptly prior to these projects.
the contract for midland
[5] The defendant was engaged by BLJC Company to have work done on the Midland Post Office site. BLJC was the defendant’s largest customer. Mr. Sarracini contacted Mr. Graci based on their prior working relationship. Mr. Sarracini asked Mr. Graci to meet him at the site in March or April of 2008 to perform measurements and ultimately provide an estimate for the work to be done. This location was one of several jobs priced by Graci for the defendant in regard to parking lots at Canada Post facilities including the Beaver Creek location.
[6] Tab 2 of the Joint Document Brief is a written quotation dated April 8, 2008 from Mr. Graci for work at the Midland site. The quote is for work to remove and replace the existing asphalt on a portion of the parking lot. There is specific reference to “saw, cut and remove existing asphalt”. The total price quoted was $67,700.00. There is also reference that the quotation is based on current asphalt prices. Evidence at trial disclosed that the cost of asphalt fluctuates from time-to-time. The ultimate cost of the asphalt would obviously affect the final price. Tabs 6-8 inclusive of the Joint Document Brief showed the rise in the cost of asphalt from late March to late July of 2008.
[7] Tab 3 of the Joint Document Brief is a further written quote dated July 17, 2008 in regard to the Midland site. It refers to rebuilding a manhole and two catch basins. The increased cost for that would be $2,200.00 plus an additional charge for weekend grinding totaling $1,500.00.
[8] Tab 4 is a copy of a fax sheet from the defendant to the plaintiff dated July 17, 2008 with a note to “please proceed as per to follow”. The defendant acknowledges the accuracy of the quotations provided by Mr. Graci and that he accepted the terms in his fax response.
on site meeting before work is commenced at midland
[9] Before work started there was a meeting at the Midland site. This was an important event for purposes of this litigation. The plaintiff recalls that he and Mr. Sarracini were present with others who he could not recall. Mr. Sarracini recalls that those present were himself, the plaintiff, as well as Stacey Cutting of BLJC plus one or two people from Canada Post. The only people who testified as to what occurred at that meeting were the plaintiff and the defendant. Both parties agreed that the meeting took place close in time to July 17, 2008.
[10] The parties have quite different recollections of the meeting. Mr. Graci testified that a decision was made by those present, but not by him, that the job at the Midland site would be to grind and repair the asphalt surface rather than to remove and replace the surface. Thus it would not be a full removal of the existing asphalt and replacement with a new surface. Mr. Graci indicated that this decision was made in part because Canada Post did not want to have a depression in the surface of the parking lot in front of the loading docks during working hours. The process of a complete removal and replacement was not practical for the purposes of Canada Post. According to Mr. Graci, he and Mr. Sarracini agreed that even though the contract now would be changed to grind and repair the quoted price would remain the same. This was on the basis that even though there would likely be less asphalt required there would be increased cost for grinding the existing surface on weekends so that the overall price would remain the same as was quoted in April of 2008. Mr. Graci concedes that he did not document this change in the work to be done at the site. He felt confident to proceed based on the conversation that took place at this meeting based on his prior good working relationship with Mr. Sarracini.
[11] Mr. Sarracini testified that prior to the meeting BLJC had wanted to change the construction plan to have the work done only on weekends. Further, they wanted repairs to the catch basins at Midland. This reference to the further work in regard to the manhole and catch basins is reflected in Tab 3 of the Joint Document Brief.
[12] Mr. Sarracini testified that at this meeting there was approval for the extra cost for items as reflected in Tab 3, as well as the work to be done on weekends. Mr. Sarracacini was adamant that there were no other changes to the work to be done. Specifically, he testified that there was not an agreement to change the process to a grind and repair from the original agreement in April of 2008 that provided for removal and replacement of the existing asphalt.
completion of the work at midland
[13] Between July 26 and August 18 of 2008 work was completed at the Midland site. Mr. Graci testified that on the third weekend of this project, being August 16, 2008, Mr. Sarracini had pointed out that some areas had been missed. This necessitated two more loads of asphalt to be delivered. This additional work and material appears to be reflected on page 12 of Tab 24 of the Joint Document Brief which documents a delivery of two loads of asphalt on August 18, 2008.
[14] On the same date there is an invoice for the Beaver Creek site in the amount of $3,150.00. Tab 12 of the Joint Document Brief shows the total outstanding for the two projects being $78,120.00.
actual costs paid by the plaintiff for materials and labour on the midland site
[15] Tab 24 of the Joint Document Brief are the invoices sourcing the actual costs to the plaintiff for the work and materials at the Midland site. After a minor adjustment for the cost of line paving the total expended by the plaintiff was $59,647.00. Pages 9-12 inclusive of Tab 24 are the invoices from the provider of asphalt. These are dated July 26, August 9, August 16 and August 18, 2008. The three deliveries in August 2008 all had invoices that refer specifically to the Midland post office as the delivery address. The first invoice, dated July 26, 2008 in the amount of $22,118.31 was not included in the original Affidavit of Documents provided by the plaintiff before his examination for discovery in April of 2010. Mr. Graci testified that this invoice had been misfiled and was not located and produced until November of 2013. He was examined on this document at a further discovery on March 4, 2014. This particular invoice does not refer to the Midland Post Office as the delivery address or customer and in fact none are indicated.
[16] Understandably, defence counsel suggests that it is suspicious that this particular invoice for the largest amount of materials applied to the Midland site was not located and produced until years later.
[17] Mr. Graci testified that July 26, 2008 was the first day of work at the Midland site. The first day on such a project involves the largest amount of asphalt. The invoice dated July 26, 2008 was for the largest quantity and cost of material of the four invoices. As of that date he only had one work crew and they were assigned to the Midland site.
[18] The invoice dated July 26, 2008 includes a significant amount of detail even though it does not refer to a customer or delivery location. The document refers to 14 loads of asphalt being delivered, the type of asphalt, the unit price and the environmental fee. In the circumstances I am satisfied that page 9 of Tab 24 in fact refers to asphalt that was delivered to the Midland site and was invoiced to the plaintiff.
events after work completed at the midland site
[19] Mr. Graci indicates that he received no complaints from Mr. Sarracini or anyone else about the work at the Midland site. In October or November of 2008 Graci testified that Mr. Sarracini said that he would be paid in early 2009. Mr. Sarracini said that the Midland project was not to be paid in that fiscal year. Mr. Graci said that he was told to wait until the end of February 2009 for payment. Mr. Graci followed up and was told that the money was coming. On March 3, 2009 Mr. Sarracini issued a cheque in the amount of $30,000.00 to the plaintiff.
[20] Mr. Graci testified that after he received the $30,000.00 cheque Mr. Sarracini stopped returning his calls. He received no further response and Mr. Graci finally threatened legal action to collect the outstanding amount. Mr. Sarracini denies that he was present when any of the work was being done on the site and thus did not know what the quality of the work was. He had no prior problems with the plaintiff on other projects. He testified that he did not pay for some period of time because BLJC had not released funds to him. He said that he wrote the cheque for $30,000.00 just to help Graci out and said that they would talk later. Sarracini said he did not know that the work done was not in accord with the original contract.
[21] Mr. Sarracini testified that he paid the $30,000.00 to the plaintiff after receiving a complaint from Stacey Cutting of BLJC. Ms. Cutting did not testify and there were no documents filed in regard to her or anyone else complaining of the quality of work done by the plaintiff at Midland.
[22] Mr. Sarracini testified that when he found out in early April 2009 that in fact the asphalt had not been replaced he was very upset and did not want to speak to the plaintiff. He admits that he did not receive any written complaints from BLJC or Canada Post about the work done at Midland.
[23] Mr. Sarracini claims that he was forced to give what he called a “verbal ten-year warranty” to Canada Post for the work done on the parking lot at Midland. Mr. Sarracini has not provided any further evidence or called any witness who would confirm any kind of an arrangement whereby he was forced to warrant the work that had been done by the plaintiff at Midland.
[24] Mr. Sarracini testified that he inspected the site at some stage and found that the surface was “just falling apart”. He says now that it is much worse than it was in the year 2010.
[25] In cross examination it was suggested to Mr. Sarracini that he had received in excess of $75,000.00 from BLJC for the work at Midland. That figure exceeded the invoice price from the plaintiff to the defendant for Midland. Mr. Sarracini could not recall what amount he had received but did not deny it was in excess of $75,000.00. He confirmed that he has not returned any portion of what he received to BLJC or Canada Post.
[26] In regard to the Beaver Creek site, Mr. Sarracini does not dispute that the money is owing and has not been paid to the plaintiff.
[27] Mr. Sarracini has not been asked by BLJC or Canada Post to repair any of the work done at Midland. He did not produce a quote for anticipated or required repairs at the site.
experts
[28] At the outset of the trial counsel indicated that each side would be calling an expert witness and that the qualification of each expert was admitted. Both parties called engineers who testified in regard to the thickness of asphalt at the Midland site. The expert retained by the plaintiff attended the site in April 2014. The defence expert attended the site for testing in March 2014. The evidence of the two experts as to the state of the parking lot in the year 2014 does not assist me on the issue of whether or not the plaintiff provided the services and material that were in fact contracted for in 2008.
analysis
[29] A written contract may be varied by subsequent oral agreement.
Colautti Construction Ltd. v. City of Ottawa 1984 1969 (ON CA), 5 OAC 74 (1984).
[30] Subsequent conduct may be used to interpret a written agreement.
Montreal Trust Co. of Canada v. Birmingham Lodge Limited et al. 1995 438 (ON CA), [1995] O.J. No. 1609 (C.A.).
[31] After the original agreement in April of 2008 but before work began at Midland there was a change in the project and how it would be completed. The change was instigated by BLJC who had retained the defendant. Mr. Sarracini testified that BLJC required the following:
work would only be done on weekends.
there must not be a depression in the surface of the parking lot in front of the loading docks during working hours.
additional work was required to rebuild a manhole and two catch basins.
[32] Understandably, Canada Post wanted to reduce any disruption of their work schedule related to the parking lot project.
[33] The parties agree that the original contract for Midland was to remove and replace the existing asphalt. A critical issue in this case is whether that original agreement was varied on consent to provide for grind and repair of the existing surface at the same price. The defendant denies there was any agreement other than to remove and replace.
[34] The parties agree there was a preconstruction meeting close in time to July 17, 2008. While there were others present at that meeting the only witnesses who testified were Mr. Graci and Mr. Sarracini. The assessment of the credibility of these two witnesses is very important.
[35] The parties agree that Tab 3 of the Joint Document Brief reflects a change in the way the project would be carried out. Significantly, it refers to an additional charge for weekend grinding. This additional quote from the plaintiff dated July 17, 2008 was accepted by the defendant by a fax reply of the same date. The reference to “grinding” the surface (as opposed to “saw, cut and remove existing asphalt”, tab 2 dated April 8, 2008) supports the plaintiff’s claim that the revised agreement was to grind and repair.
[36] I did not find Mr. Sarracini to be a credible witness. On important issues he was vague or evasive including the following:
- In cross examination he claimed to not recall whether he had received more than $75,000.00 from BLJC for the Midland project. He did not deny that he had been fully paid. He agreed that he has not repaid any of those funds to BLJC or Canada Post.
Mr. Sarracini is an experienced contractor who has handled major projects for Canada Post and BLJC. I do not accept his evidence that he is unaware of exactly how much he received from BLJC for the Midland project. That is a clearly ascertainable and highly relevant fact within his control.
- He claims that he received a verbal complaint about the quality of the work at Midland from Stacey Cutting of BLJC. He stated this was before he paid $30,000.00 to the plaintiff in early March of 2009. In cross examination he agreed that he has never received a written complaint from BLJC or Canada Post about Midland. Stacey Cutting did not testify, nor did anyone else from BLJC or Canada Post. There is no admissible evidence on this trial of any complaint from BLJC or Canada Post. Mr. Sarracini does not dispute that he was paid in full for Midland and that no remediation or repair work has been requested by BLJC or Canada Post.
Mr. Sarracini claims that formal complaints were not filed by BLJC or Canada Post “because they did not want the disruption”. That evidence is hearsay and does not prove what Mr. Sarracini alleges.
- Mr. Sarracini claims that based on a verbal complaint from BLJC (which is not in evidence) he was required to provide a “verbal” 10-year warranty on the Midland project. There is no other evidence of such a warranty. This issue was important to Mr. Sarracini as he relies on it as justification for withholding funds from the plaintiff. I do not accept his evidence on this issue. He is an experienced businessman and contractor on large scale projects. It is not believable that he would be required to verbally warrant work on a project for Canada Post for 10 years. There is no admissible evidence at this trial that he was required to give any such verbal warranty.
[37] Mr. Graci testified there was a change in the original contract of April 2008 from “remove and replace” to “grind and repair”. He indicated this change was proposed at the preconstruction meeting close in time to July 17, 2008. He acknowledged the following:
He did not “paper” the change based on his longstanding, good business relationship with Mr. Sarracini. The parties agree that they had a positive business relationship before this project.
The July 206, 2008 invoice (page 9 of Tab 24) he paid for asphalt at Midland was not found and produced by him until November 2013. He says it was apparently misfiled since it did not refer to Midland. He understands that this may look suspicious but explained why he can relate it to the Midland project. It related to the largest of four deliveries and was for the first day of work at Midland. The first date of such a project always requires the greatest quantity of asphalt. He had only one work crew that day and it was assigned to Midland. I accept his evidence that the July 26, 2008 invoice reflects part of the overall costs of material or labour that he expended in excess of $59,000.00 on the Midland and Beaver Creek sites.
The reference in Tab 3, the additional quote dated July 17, 2008, supports his evidence that the agreement changed from “remove and replace” to “grind and repair”. This document refers to “additional charge for weekend grinding”. The original quote of April 8, 2008 refers to “saw, cut and remove existing asphalt”.
conclusions
[38] I accept the evidence of Mr. Graci that before work began at Midland the parties had varied their agreement. The project was to proceed as grind and repair and not as remove and repair.
[39] Based on the previous good business relationship between the parties the change in the agreement was not documented as well as it should have been. Nonetheless, I do not accept Mr. Sarracini’s evidence that the project was to proceed on a “remove and replace” basis.
[40] I accept Mr. Graci’s evidence that the quoted price remained the same, subject to fluctuation in the cost of asphalt. While “grind and repair” would likely require less asphalt there would be increased labour costs for weekend work.
[41] Mr. Sarracini does not deny that he in fact received full payment in excess of the quoted price for the Midland project. He also agreed in cross examination that he did not receive any written complaints from BLJC or Canada Post as to the quality of work done. He has never been asked to have remedial work done and has not returned any of the money he received for Midland.
[42] I find that the plaintiff has proven that the defendant owes $48,120.00 plus interest based on the agreement and the work done in July and August of 2008. It is unnecessary to consider the alternate claim based on quantum meruit.
[43] The defendant’s counterclaim for remedial work which was not performed and for which an estimate has not been tendered is not proven.
result
[44] The plaintiff is entitled to damages of $48,120.00 plus prejudgment and post judgment interest at the rate of 24%
[45] The counterclaim of the defendant is dismissed.
[46] I will consider brief written costs submissions (no more than three pages plus supporting documents) if the parties are unable to agree.
B. P. O’Marra J.
Released: June 13, 2014
COURT FILE NO.: CV-09--383197
DATE: 20140613
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MANCUSO PAVING LIMITED
Plaintiff
– and –
HOLLINGWORTH SERVICES INC.
Defendant
REASONS FOR JUDGMENT
B. P. O’Marra J.
Released: June 13, 2014