ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-09-383523
DATE: 20140813
BETWEEN:
HOMEWOOD DEVELOPMENT INC.
Plaintiff / Respondent
– and –
2010999 ONTARIO INC. and MERIDIAN CREDIT UNION LIMITED
Defendant / Applicant
Allan D.J. Dick, for the Plaintiff / Respondent
P. James Zibarras, for the Defendant / Applicant
HEARD: June 13, 2014
B. p. o’marra j.
ruling on an application to oppose confirmation of a master’s report
[1] The applicant moves under rule 54.09(2) to oppose confirmation of the report of Master C. Albert, dated September 10, 2013. The report followed a 12-day trial of a construction lien action. In reasons released June 26, 2013, Master Albert ordered 201 Ontario Inc. to pay $201,670.45 to Homewood Development Inc. and that Homewood was entitled to a construction lien in that amount.
[2] 201 had contracted with Homewood to renovate an existing building at 627 Danforth Avenue, Toronto. Conflicts about scope of work, price and payment arose part way through the project. Homewood left the job and claimed payment for the materials and services it supplied. 201 counterclaimed for completion costs, deficiencies and lost rent.
[3] 201 summarized the chronology of events leading to the dispute in paragraphs 1 through 3 inclusive of its factum:
In July of 2008, 2010999 Ontario Inc. (“201”) entered into a lump-sum construction contract (the “Agreement”) with a contractor, Homewood Development Inc. (“Homewood”), to completely renovate a 2-storey building located at 627-631 Danforth Avenue (the “Property”). The renovation was to be completed according to a set of plans dated August 2008 (the “August 2008 Plans”).
Leading up to the signing of the Agreement, Homewood suggested that the renovated floors should be constructed using pre-cast concrete slabs (“Coreslab”), as opposed to steel bean and poured concrete construction. 201 accepted Homewood’s suggestion. Almost two months after the Agreement was executed, Homewood advised 201 that it could not in fact use Coreslab, forcing the project to go back to steel beam and poured concrete construction. This change caused considerable delay and other related issues for 201, given that a major element had to be revised mid-project.
The Agreement expressly provided that Homewood was to receive payment through a series of installments based on completion of seven performance milestones (the “Milestones”). After completing (and receiving payment for) two of the Milestones, Homewood improperly submitted an invoice for the fourth Milestone. The fourth Milestone required completion of the mezzanine level and the glass front of the Property, neither of which had been completed. The third Milestone was also not completed. Relying on the Agreement, 201 refused to pay. Homewood responded by abandoning the job site.
[4] In her 38 pages of reasons, Master Albert found the following.
(i) 201 repudiated the contract;
(ii) performance milestones were implicitly amended; and
(iii) Homewood was entitled to damages.
The applicant submits that the Master made several reviewable errors in arriving at her decision.
standard of review
[5] The parties agree that the standard of review under rule 54.09(2) is consistent with the scope of appellate review of a trial judgment. A judge hearing such a motion may overturn any aspect of a master’s report on a finding of an “error in principle” or “patent misapprehension of the evidence”. The court ought not to interfere with the result unless there has been some error in principle demonstrated by the reasons, some absence or excess of jurisdiction, or some patent misapprehension of the evidence.
Jordan v. McKenzie (1987), 26 C.P.C (2d) 193 (Ont. S. C.) at para. 10; aff’d (1989) 39 C.P.C. 217 (Ont. C.A.).
[6] Justice Perell, in the case of Heyday Homes Ltd. v. Gunraj, affirmed that the case law regarding the standard of review is consistent with the scope of appellate review of a trial judgment. He indicated that trial judgments should be upheld by appellate courts unless there is “palpable and overriding error”. Palpable error is one that is obvious, plain to see or clear. An overriding error of fact is an error that is sufficiently significant to vitiate the challenged finding of fact.
[2005] O.T.C 605 at paras. 9 and 10.
did master albert err in finding that 201 repudiated the contract?
[7] One of the most contentious issues at trial was which party was responsible for changing the scope of the work. A determination of this issue would, to a considerable degree, also determine which party breached the contract. In order to determine who changed the scope of the work it was first necessary to determine what the parties initially agreed to by execution of the contract on July 18, 2008. The applicant argues that Master Albert made several reversible errors in coming to her determination that it was 201 that changed the scope of the work.
i) Did Master Albert Err When She Found that the August 2007 Plans Defined the Scope of the Work and was Incorporated by Reference into the Executed Contract?
[8] Master Albert deals with this aspect in paragraphs 6-17 inclusive of her reasons. She notes that the scope, structure and design of the building was a “moving target”. This was evident from the eight different versions of plans that were entered as exhibits at trial, each with one or more aspect of the project changed. At paragraph 9 of her reasons, Master Albert provided a helpful table that listed each plan chronologically and described the distinguishing features of each one. New or changed features were underlined to emphasize how the plans evolved over time. She also noted in paragraph 9 that the contract does not expressly identify any plans by date or otherwise. At paragraph 11, she noted that she received conflicting evidence on the issue of what plans were agreed to in the contract.
[9] In paragraph 11, she referred to the evidence given by the witness Constantin Voidonicolas on behalf of 201. The Master found that he tended to exaggerate and was either forgetful or evasive in regard to important matters at trial. In paragraph 13 she pointed out that the parties agreed that the August 12, 2008 plans most closely reflected the project and they both submit that those are the plans referred to in the contract. However, the August 12, 2008 plans did not exist on July 18, 2008 when the parties executed the contract.
[10] Master Albert determined that the building plans incorporated by reference into the written contract executed by the parties were the August 18, 2007 plans, subject to modifications contained in the contract itself. This was one of two sets of plans actually in existence at the time of the execution of the contract. In her view, it was the one that most closely resembled the scope of the work described in the contract. At paragraph 27 she determined that “the contract executed by the parties on July 18, 2008 forms their agreement to build the structure depicted in the August 18, 2007 plans with the deletions and additions specified in the written contract, including Coreslab construction”. She further found that when the parties discovered that Coreslab could not be used they mutually agreed to change to steel beam and poured concrete construction.
[11] These finding were supportable on the evidence. There was no error, let alone a palpable and overriding error, that would warrant appellate interference. The very fact that the Master’s decision was informed, in part, by weighing conflicting testimony at trial must be considered with the level of deference that is to be afforded to the trial findings.
[12] The fact that the contract called for “new” building plans merely reflects the fact that the contract itself contained new construction elements that had not yet been incorporated into the building plans then in existence. It does not mean that any previous plan was immaterial.
[13] In my view, there is no merit to this argument.
ii) Did Master Albert Err in Finding that the Elements of the Construction Changed?
[14] Paragraph 9 of Master Albert’s reasons and the table of plan changes produced there made it evident that the elements of construction were constantly in flux. There were eight sets of plans, five of which were created after the contract was entered into. The contract itself called for the construction of concrete walls. The first set of plans produced after it was signed called for steel and glass frame. Homewood provided additional quotes for the new/changed work, which were rejected by 201 and different subcontractors were hired. With respect to 201’s assertion that the change of the north wall from concrete to steel and glass was equivalent to the original plans, Master Albert found at paragraph 43 that there was “no evidence to support this theory”. She also found as a fact that the north side glass wall was an extra under the contract, not an element of the contract itself. She made this finding based on the evidence before her which included conflicting witness testimony. Those findings must receive appellate deference. There is no merit to this argument.
iii) Did Master Albert Err in Finding that the Performance Milestones had Been Implicitly Amended?
[15] Master Albert heard testimony that indicated that changes to the building plans necessitated changes to the order in which certain parts of the building were to be constructed. She accepted that testimony.
[16] At paragraph 52 of her reasons, she set out the contractual requirements for installment payments being seven milestones.
[17] It is instructive to reproduce paragraph 53 of the Master’s reasons on this issue.
[53] The amount payable is not necessarily the value of services and materials to be supplied from one milestone to the next. The milestones are based on substantial completion of stages of work and the anticipated order of construction. 201’s design and structural changes affected that order, including:
a) steel beam and poured concrete construction in place of first and second floor coreslab;
b) steel instead of wood support bens for the mezzanine. This change made it impossible to install the roof before completing the mezzanine because the steel could not be delivered and installed with the roof in place. Consequently milestone #3 could not be completed before milestone #4;
c) an extra steel beam for the mezzanine to provide structural support to join the two mezzanines into a single mezzanine floor. This steel beam had to be installed before the roof, making it impossible to complete milestone #3 before milestone #4;
d) changing the design of the front face of the building from masonry with windows to a steel from structure with a glass curtain wall. 201 contracted directly with Pittsburgh Steel for the steel structure and with Thermo world for the glass, having rejected Homewood’s quote for this change as an extra. This made it impossible for Homewood to complete the contractual items required for milestone #4; and
e) 201 increased the height of the building by two and a half feet requiring additional masonry. Rather than authorize Homewood to complete the additional work as an extra 201 hired Homewood’s subcontractor, S & P Masonry, directly for the additional height. As a result, Homewood lost control over the timing of the roof installation, scheduled to follow completion of the masonry walls. Homewood never installed the roof.
[18] All of the changes found by the Master are findings of fact. Based on those facts and others, including an assessment of witness testimony, the Master determined that certain milestones could no longer be completed in the order agreed upon in the contract or that the parties effectively agreed that the order of compliance completion had to be changed. In paragraph 56 she indicated as follows: “201’s design and structural changes required a change to the order of work contemplated by the milestones in the contract. The roof could not be installed before the mezzanine deck because of access issues”. At paragraph 71, she found that as a result of those changes the milestones for payment were implicitly amended as well. She specifically pointed out that “when 201 contracted directly with other contractors for the steel frame and glass, that work was removed from the Homewood contract as a condition precedent to payment of milestone #4”. At paragraph 84, she pointed out that it would be “unfair to allow an owner who changes the design, causing the order of the work to change, to rely on that change to avoid milestone payments that would have been required had the owner not changed the design”.
[19] All of those findings of the Master were supportable on the evidence and should not be interfered with on review.
iv) Did master albert err in finding that homewood was entitled to damages?
[20] At paragraph 86 of her reasons, the Master found that 201 had repudiated the contract and refused to pay a particular invoice as well as Homewood’s reasonable offer to accept $40,000 to continue the work. She found that 201 had an obligation to act reasonably and renegotiate the milestones for payment when the order of work changed. She found that Homewood as the innocent party was entitled to treat the contract as at an end. The award of damages was premised on the finding based on the evidence that 201 had repudiated the contract. I see no error in law or overriding factual error on this issue that would warrant interference with her findings in this regard.
further alleged errors by master albert in assessing the evidence of the witness voidonicolas
[21] The applicant submits that the Master misrepresented the evidence given by this witness at trial and that findings related to the witness were inconsistent with other findings. The alleged inconsistencies, if they actually rise to the level of inconsistency, are in fact minor details in what was a lengthy, thorough and well-reasoned decision. They cannot be viewed as palpable or overriding and justification for appellate intervention.
result
[22] Application dismissed. I will consider brief written costs submissions to be filed within 15 days.
B. P. O’Marra J.
Released: August 13, 2014
COURT FILE NO.: CV-09-383523
DATE: 20140813
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HOMEWOOD DEVELOPMENT INC.
Plaintiff / Respondent
– and –
2010999 ONTARIO INC. and MERIDIAN CREDIT UNION LIMITED
Defendant / Applicant
RULING ON AN APPLICATION TO OPPOSE CONFIRMATION OF A MASTER’S REPORT
B. P. O’Marra J.
Released: August 13, 2014